So, you know, and some people might not qualify for that. So that – you know they're just very expensive. It's – you know, if you don't have private lenders – and you and I are going to talk about that, and what the difference is here in a little bit – but a hard moneylender is a great way to go if you don't have a private lender, but a private lender is so much less costly. For an example, on that same $100,000 house you're talking about, when I close with a hard moneylender just the 5 points was $5,000 plus you'd have those other padded fees I talked about, plus you'd have to put 15 percent down of your own money –

Jeff Adams:
Plus, they're probably going to charge you, what – 12-15 percent, right?

Alan Cowgill:
Yep, plus you gotta be qualified on the thing. With a private lender, I can close on that same property for $850.

Jeff Adams:
Man, that's great.

Alan Cowgill:
Because it's all cash and in Ohio we use attorneys – I live in Springfield, Ohio. We use attorneys and they'll do a title search and their fees and the paperwork and its over and it's an all-cash deal, which is the cheapest kind of deal you can do. Also they don't – a private lender doesn't check my credit out – I don't have to qualify – and I don't have to bring any money to closing. Actually, what happens is when I close on a property to buy it with a private lender; I walk out of closing with a check every time.

Jeff Adams:
So that's great. So you probably get money for rehab, too, then right?

Alan Cowgill:
Yeah, what I do is it really comes in three categories. First category is the purchase price of the property is covered. The second category is like you're talking about the rehab costs. And there's a third category, which is contingency money. Now that third category is money that will cover the rehab in case I missed my target. In case I missed my analysis on what I thought it would cost to rehab the property. That contingency money is to protect me in case I need money for something else.

I – you know I don't want to borrow money and then not be able to finish the rehab or – and go back to the well to get more money later. I want to get it all up front so I always borrow al little extra. It's normally about $3-5,000 per deal extra and if you've got a higher-priced deal you might want to borrow a little bit more, but on the deals I'm doing its about that. And now the nice thing about this if I don't use the money; if I've hit my number on the rehab, then that money becomes early profit. And I've just borrowed money from a private lender and I've got early profit. Which helps cash flow out tremendously as you can imagine.

Jeff Adams:
That's great. So Alan, what kind of deals can you use private investors for?

Alan Cowgill:
Well, you can use them – my kind of deals are single-family houses or small multi-units. And you can also use them on apartment complexes and you don't use the money typically to buy the whole apartment complex; you use it as a down payment and to rehab the units that need fixing. So you borrow that money so you've got some money down, and then you – because you're going to have some money in the deal typically and you just borrow it from a private lender.

And then you normally get financing from a commercial lender for the balance of the – if it’s a major complex. You can also use it on commercial property for the down payment. You got a commercial lender that will normally take care of about 80 percent; well you use the private money for the 20 percent. And something that a lot of – deals that a lot of people don't think about, Jeff, is if you've got a luxury home and someone wants to deed you the home, give you the home? What happens on those type of deals is a lot of investors aren't sure of what they're going to – how they're going to handle that monthly payment.

Those big monthly payments scare them. Well if you bring in a private lender and have the private lender make those payments for you, then you don't have that worry.

Jeff Adams:
Yeah, that's fantastic.

Alan Cowgill:
Yeah, and a lot of people need to step up to that out there that are real estate investors because they live in areas that have so many luxury homes and they can handle the deal if they just let the private lender make the payments. And let's say, for an example they've got a private lender that will only make let's say the first five-six payments on the property and the real estate investor doesn't have the deal handled – all they got to do is bring in another private lender to start picking up the payments from there.

Jeff Adams:
Yeah, that's great.