Alan Cowgill:
Yeah, and it's a win-win. What happens is if you've got someone that wants to get rid of a luxury home, you know, it's a quick way for them to get rid of the property, and so they win so they can get on with their life. The private lender wins because they're getting a decent rate of return. And the rate of return – this is an individual thing so the real estate investor can tailor the program to their business and they can pay a rate of return that's going to make the private lender happy and then obviously the real estate investor wins when the property is sold. And on the luxury homes I should mention also that you use the private money to rehab the property because on the luxury homes the folks that buy them don't want to come on in and do the work a lot of times but they're going to want something that's pristine. And that's what you use the money for.

Jeff Adams:
That's fantastic. You know I tell people all the time the big time developers like Donald Trump for example – he's not out there using his own money. He has private investors out there putting the money up for him.

Alan Cowgill:
Yep.

Jeff Adams:
And that's how he's able to go out and do all these different developments all over the place.

Alan Cowgill:
That's right.

Jeff Adams:
And that can definitely be the key to – the listeners on the call tonight – their success is having private money in their back pocket.

Alan Cowgill:
Yep. Yep. And that's what I've found. I mean, let me share with you a little bit about my first private lender. My first private lender was my mother. And what had happened was my dad had passed away and mom had come into some insurance money, and she hadn't been taking care of the financing in the home and she did – she knew that she'd probably have to live on this principle the rest of her life. And she wanted to make sure it was safe and she got a nice rate of return and so what she did was what you would expect most people to do is she went down to the bank and put it on a bank CD.

Well, what happened was the rates that they were paying didn't really support mom, and I had taken real estate seminars and things like you and I are doing tonight, Jeff I'd listen in and get a solid education which is the foundation for a real estate investor to be successful and so I heard this thing about hard moneylenders and then I heard things about private lenders and I finally got it figured out that with a hard moneylender – they set the rules. But with a private lender I set the rules as a real estate investor.
So I went back and talked to my mom and I said you know you're getting this paltry rate of return on a bank certificate of deposit; I can pay you 15 percent interest and I can make you monthly payments just like the bank.

And she was ecstatic. And so she took the money off the CDs and she loaned it to me and I secured her money by putting a mortgage on the property with her on there. She got a personally signed promissory note from me. She got hazard insurance and she got lender title insurance. And it was the same thing that when we buy our personal residence that banks do to us – I used the same paperwork to secure my private lenders.

Jeff Adams:
So she basically was in first position just like the bank would be?

Alan Cowgill:
Yes. Yep. Exactly right.

Jeff Adams:
So let me ask you this, Alan. At what point in your business did you start bringing private funding into your real estate investment business?

Alan Cowgill:
Well, what happened to me, I went through the learning curve on this and it was, you know, some of it was painful where we talked about before that I borrowed money off a credit card and I looked for creative real estate deals where the seller would carry back the second and I used a line of credit and I used hard moneylenders and what happened to me was along the way was I was getting a solid education in real estate investing and I realized that I needed to bring private lenders into my life and I had my mom there as my first private lender and then I ran a little ad in the local paper and I had a guy answer the ad and I went over to his house and I sat there at his kitchen table and he quizzed me about private lenders and I gotta be honest with you – it was really hard for me to get information on the dos and don'ts with private lenders back then and I couldn't answer all of his questions. But when I walked out of there, he had loaned me $5,000.

Now I know that doesn't sound like a lot, but it was to me back then and I was on Cloud Nine because I'd ran an ad and someone had loaned me money. And I know that the logical thing to do would be to run another ad wouldn't it?

Jeff Adams:
Absolutely.