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The Private Lender Podcast - Keith Baker EPISODE 90, 24th December 2019
PLP-090 Redefining Private Lending: Does Your Money Work For You?
00:00:00 00:11:15

PLP-090 Redefining Private Lending: Does Your Money Work For You?

PLP 90 | Defining Private Lending

 

The term "private lending" has, for too long, been misused and misunderstood to the point where misconceptions are almost as prevalent as the truth. This is why defining private lending is so important in the first place. Host, Keith Baker, reclaims the use of private lending by redefining how it should be viewed. Private lending, at its core, is an investment and should be treated as such. Get back to basics with Keith, and see why and how private lending is for you.

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Redefining Private Lending: Does Your Money Work For You?

Are You Wanting An Investment Or A Job?

If you are looking for practical old-world wealth building principles and techniques to be discussed, you're in the right place. If you want to learn from my mistakes in investing in real estate as a private lender, pull up a chair and pour yourself a drink because this show is for you. Before I get too far along, there is a nice little freebie at the end of this. Now that I've shamelessly attempted to pique your curiosity with the cheap marketing tactic, let's get down to the brass tacks and right to the heart of the matter.

Taking some time off and switching jobs has been a very good exercise for me. It's gotten me some clarity about this show and where I want to take it. I just want to stop talking about it and start doing it. That's part of the trick at the end is getting moving, taking some action and getting a lot more clarity in my message, in my marketing and all that fun stuff. I'm hoping that I can shape and modify some mindsets for both of us and we'll see how it goes.

We are in a rapidly changing world. The notion of 5G and what it's going to be able to do boggles my mind. I'm still hung up on nanotechnology from decades ago. There's so much out there, so much is changing. I'm just a guy, who am I? There's a lot of noise out there. There's a lot of people out there online and saying this, saying that. Some of them are ripping people off. I know some of these people. I don't like to admit it, but I do.

During the hiatus, I was able to sit down and think about where I want to take this thing and what the mission is. I decided the first thing to do is to make some distinctions publicly on the show, in Facebook and everything else. The first misconception people have is they think that private lending is a way to get rich. It can be if you lend in an unethical, immoral or illegal way. It's like anything else. You can make as much money as fast as you can. If that is your intention, then this show is not for you.

[bctt tweet="My money, my terms." username=""]

If you are reading this, go ahead and stop it or unsubscribe because you'd be doing both of us a big favor if you did. That's the biggest thing I wanted to get out first. Distinction number two, I am not or nor is this show a hard money lender or a broker. Hard money lenders work for their money and so do brokers. I do not have any interest in taking somebody else's money at a lower interest rate and arbitrage it back out at a higher to somebody else. It's just too much work. I also don't loan to strangers off the street. That's what hard money lenders do.

Plain and simple, my goal is to educate people and provide a little bit of help, some education and some avoidance techniques of how to be able to lend to real estate investors that you know and on projects that you understand. It's an education thing. I always wanted to be a teacher. With that distinction, I want to clarify that the mission is to help motivate people just like ourselves. Learn how to diversify their investments into the most passive form of real estate investing there is, that is being a private lender.

[caption id="attachment_2665" align="aligncenter" width="600"]PLP 90 | Defining Private Lending Defining Private Lending: Unless you hire a money manager to handle your funds, every investment requires some level of action from the person making it.[/caption]

 

Also, seek alternatives to Wall Street, banks and brokers. It still bothers me that even when people know that the market is going to crash or it is crashing, it's on the down, huge bonuses are paid out for not losing as much money as the next guy. It’s one of those weird things. It’s to help motivate people and take more control over our financial situation, not just for private lending, but the daily family profit and loss statements. This is another way to gain knowledge and to grow a network.

This online world is even getting crazy. The mission here is to help people mitigate risk and confidently invest in private mortgages and keep their investments as safe as possible. No investment is 100% safe, but private lending is one of the few investment strategies that you can get insurance policies to help protect your investment. You're not going to get that on stocks, that's for sure. I jokingly say this, but one of missions is I want to help people realize the truth of the gold rule. That’s who has the gold makes the rules. It's my money, my terms.

[bctt tweet="If it's done properly, private lending can help build wealth in the long-term." username=""]

When it comes to these private lending, I don't like going outside of my comfort zone and I want to help people define what is their comfort zone, which isn't as hard as you think, but it can take a while. It’s eliminating the needs of banks with real estate and private lending. There’s no better way to nourish a new economy than between people. That's the goal. The mission is to educate the public or at least those who want to learn through me.

Full disclosure, I'm not an expert's expert. I don't have degrees in finance. I’m just a guy who took some old 401(k)s and turned them into IRAs and started making investments in real estate. I've been doing it for a while so I have some experience there. This is not the fast money of private lending or real estate investing. It’s not going to be that, but it is for people that want to avoid mistakes because you can make some pretty big ones early on. It’s my goal to help you stay safe and not make loans that will get you in trouble. That's the mission of the show. That was very long-winded and not very concise. I wanted to get that out there.

[caption id="attachment_2666" align="aligncenter" width="600"]PLP 90 | Defining Private Lending Defining Private Lending: Private lending is something like a retelling of the story of the Tortoise and the Hare. It's for the long-term.[/caption]

 

The third distinction I wanted to bring up is private lending is investing. There's a huge difference between investing and laboring for your money and laboring after it. It’s still laboring in that scenario. Being a private lender is not a full-time job, unless you have a ton of your own money and all you do is loan people money and make interest. God bless you if you do because that's great. Aside from that, private lending is investing. It's not investing in no money down properties. A lot of people get out of Corporate America to get into real estate. They worked themselves into another frenzy job because real estate gets popular and the deals are harder to find.

The next thing you know, they've got to flip 3, 4 houses to keep going and pay the bills. No, this is not that. I looked up the definition of investing. If you ask Dictionary.com, investing is to expend money with the expectation of achieving a profit or material result by putting it into financial schemes, shares or property or by using it to develop a commercial venture. I like Investopedia.com’s definition, which says it's the act of allocating funds to an asset or committing capital to an endeavor, a business project or real estate with the expectation of generating an income or profit. In colloquial terms, investing can also mean putting time or effort, not just money, into something with a long-term benefit such as education.

[bctt tweet="Private lending is not a get-rich-quick scheme." username=""]

Unless you hire a professional money manager to handle all your funds, every investment requires some level of action from the person doing the investment. If not, it's not investing, but more like gambling. You're putting your money up on something in hopes of gaining more if the cards fall the right way. I would like to equate learning how to be a successful private lender with learning fundamental analysis with stock investing. It's the same principles of selecting stocks and companies that were used by Benjamin Graham and Warren Buffett. It's not sexy because it's long-term in focus. It doesn't dwell on the short-term like CNBC and all the talking heads and everybody out there.

If it's done properly, it certainly will help you build wealth over the long-term. I like to say that private lending is a classic retelling of the old story of the tortoise and the hare. It's for the long-term. If you want the flash and the glitz, go to the casino. Take up an illicit scheme. It's for the long haul. You're not going to get rich overnight. It's not going to flow fast and it is truly investing. All the work is done upfront. After that, I can let it go and trust in the project or the loan or the note. I like to build the old school way. I still have my TD Ameritrade or whoever bought the account that I keep a little bit of money to play my eight-ball account.

If I lose at a pool hall, I got some money but not put it in speculative stocks, to say the least. It satisfies my itch to do some gambling on the stock market. Fortunately, I'm not losing a whole lot of money. I’m not making any but I'm not losing much either. Thank you for hanging in there this long. The three things I wanted to cover is private lending is not a get rich quick scheme or make money fast. I'm a private lender, I'm not a hard money lender. I don't have a job. I don't do this for my day job. I do it as an investment. This is truly an investment. This is not something you're going to do until you can fire your boss and quit your job.

Think of this as buying bond funds because it's about the closest thing. There's a set time. There's a set interest rate. In private lending, there's collateral. There's property. I'm going to throw out some free twenty-minute calls. Just get on Zoom and chitchat, bring a deal to me. If you got a question about private lending or how to do something, how to get going, how to get started or how to select an attorney to get your documents, I’m happy to do that.

All you have to do is send an email to Info@PrivateLenderPodcast.com with the subject line Coaching Call. In the body of the email, tell me the biggest obstacle that you face and I'll send you a link to my calendar so we can schedule a call. That's convenient for both of us. I would like to learn what would help you be more successful or to mitigate your risks. That's going to do it for now. Please check me out on Facebook and all social media, Instagram, Twitter, Keith Baker on LinkedIn. Please if you can go over to iTunes, leave a rating and review, I'd appreciate it because it will help to get this into more people just like you and I. I like to wish you safe and prosperous private lending. I’ll catch you on the next episode.

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