Alan Cowgill:
And lost on every ticket, as you can imagine. Kept me bored and frustrated and I was up channel surfing one night, and 2:00 in the morning I hit a real estate infomercial and it was that Carlton Sheets guy and he said he had this course for sale and I – to be honest with you, Jeff, I didn't have the money to buy it because I'd spent all my money on lottery tickets and – but I had a credit card and they'd take a credit card. And so at two in the morning I picked up the phone and ordered that home study system.

And I became enthralled with real estate and I bought two houses that year. I bought five the next. I bought 18 the next. I bought 48 houses last year and half of those I don't make monthly payments on.

Jeff Adams:
Wow, that's great.

Alan Cowgill:
Yeah, so things have changed a little bit as you can imagine.

Jeff Adams:
You don't use hard money then, to, finance your acquisitions then?

Alan Cowgill:
When I got started, I – actually the first house, the people would sell it on a land contract. Contracts were deeds for some folks in their state. And for 10 percent down, I could buy the house on a land contract. I took the money off a credit card, and so I started out that way, and then the next way that I evolved into was we had a savings and loan here in town that was friendly to investors and they – they would let the seller carry a second back and I started doing deals like that, and the problem I had was everything was going great until one day the regulators went into the savings and loan and told them that they couldn't make loans like that anymore, and that immediately shut off my real estate business, because obviously the savings and loan was in control of my financing and when they shut it off that was it.

So then I went out and I got a line of credit and it was $100,000 line of credit and in our business, you know, that's not a lot of money.

Jeff Adams:
No, that's not a lot at all.

Alan Cowgill:
And when you max it out, you shut your business down again. And so then you brought up the term "hard moneylender." Well, along the way I heard this thing about private money and this – and hard moneylender and I got to be honest with you, I had them confused. I thought they were the same thing and actually they're very, very different. But you're right, I started getting loans from hard moneylenders and the disappointment there was –

Jeff Adams:
Don't tell me – you probably felt like they were your partners after you closed on a deal, right?

Alan Cowgill:
Yeah, they wanted a big chunk of the money.
Jeff Adams: Uh-huh.

Alan Cowgill:
And so I'd take a look at the HUD One statement when I closed, and they would be taking out like 5 points and there'd be a lot of padded fees in there, plus I had to go into closing to buy a property and have 15 percent down. Well, that money had to come from somewhere, so I either took it off a credit card, or it came out of my pocket, or the deal I just did where I got closing with cash, you know, the next property I'd have to use that cash as a down payment on the next one.

Jeff Adams:
That makes sense.

Alan Cowgill:
Yeah.

Jeff Adams:
Real fast could you give my listeners an example of what a hard moneylender will typically charge on a $100,000 loan?

Alan Cowgill:
Yeah, sure. A hard moneylender – what'll happen is they will charge 5 points, which is a percentage of the loan, so let's say you're borrowing like you say, $100,000. That would be $5,000 that goes in their pocket and not yours. You know, a hard moneylender, they're either loaning out their money or they're borrowing money from someone else, and they're making money on the loan, and they get 5 points right up front, which is they way mine – the one that I was doing business with – there's different ones out there. But they were getting 5 points of whatever I borrowed even if – you know if you borrow small amounts, each of them 5 points it really adds up.

Jeff Adams:
By 5 points you mean 5 percent, correct?