Alan Cowgill:
Yeah. One of the things I need to mention is the fact that on some lessons learned here that these private lenders will go out and when there's something good going on in your life you talk about it to your friends. And what I find from these private lenders is they don't go out and brag about how much money they're making. They would go out, though, and say how smart they are that they got this good deal going. And the next thing I know your private lenders are bringing you more private lenders.

Jeff Adams:
Yeah. And they're fighting over your deals, right?

Alan Cowgill:
Yeah. So, you know, it's amazing. It's kind of like throwing a pebble into a calm pond. And you get this ripple effect. Well, that's kind of the way I found my luncheons were. When I would go out and have these luncheons with these folks, and let them know what I'm doing, they'd – it would be a ripple effect in the community. They'd go out and they'd tell other folks and I'm in Springfield, Ohio – I'd get phone calls as far away as St. Louis, Missouri. On people that knew people that had been in my luncheon and wanting to know if I needed more money. It was amazing to kind of watch this happen to me and all the little cool lessons that took place in this thing.

The other thing, and folks might want to write this down, is that your private lenders are going to test you. And what that means is that they'll come to you and they'll say yeah, I've got $50,000 I'll loan you and the next thing you know they're up to a quarter million or a half million. Over let's say a year's period of time. Well what happens is they started out at that $50,000 – they're testing you to see if you're real. And one of the things I found out is that when they come to you and they say hey, I've got $50,000 a good thing for a real estate investor to say back to them is if I find a house for $100,000 are you interested or should I look someplace else? And a lot of times if you kind of up the ante on them right then – and so if I've got a $100,000 should I call? And so you just – you'll just learn after a while that these folks test you out to see if you're for real and once they realize that it's a good deal for them, they start piling more money and more money and they bring you other private lenders and your life is very easy.
Jeff Adams:
You know I can tell you this, Alan, I started using private lenders in my business about six years ago, and I can honestly tell you I probably have a pool of ten of them, just like you do, but there's only two or three that I use because I can pick and choose who I want to use. Does that make sense?

Alan Cowgill:
Yep, it sure does.

Jeff Adams:
And that's what happens.

Alan Cowgill:
Yeah, you're in total control, aren't you?

Jeff Adams:
Absolutely. As a matter of fact, I actually bought this triplex here in California – our market has tripled, as you know, the last five years. Bought this triplex four years ago for $53,000, put a private lenders' loan on it at 12 percent, and if I told you this you wouldn't believe me, but I'll tell you. I actually left this private lenders loan on it for four years at 12 percent.

Alan Cowgill:
Okay.

Jeff Adams:
And when I sold it the investor, he made I think his take was like $16-20,000. What he made over that four-year period. But I sold the property for $395,000. And this private lender is actually a friend of mine now and he goes let me figure this out. Four years I make – I forget what the figure was – $16,000 – and you make over $300,000. You know? But it was a win-win for me. My whole point is that once you have private money in your back pocket that is definitely the key to your success.

Alan Cowgill:
Oh yeah. Yeah, without question.

Jeff Adams:
So let me ask you this, Alan, can you describe what you look for in a private investor?

Alan Cowgill:
Oh, man. That's a great question, Jeff. You know I learned this early on. I had these luncheons and you know this is some of those hard knocks you talked about earlier. I was going down the path and learning about private lenders and I had a – I'll give you an example of what happened to me to try to explain this. The – I had a guy that had heard about my luncheon and he called me up. Remember I got that ripple effect going on and he wanted to know what houses his money would be on and I knew this guy was pretty astute and I surmised that he must have roughly a million dollars alone that he could loan out.

And he started asking me a bunch of questions and I was giving him a bunch of information and it was – he went out and he drove by the houses and then at 9:00 in the evening he was in my office on my computer comping out the houses and telling me that he didn't think they were good deals. And I realized that it was kind of one of those feelings in your stomach that something wasn't right here and he was starting to dictate how I should run my business. And him and I never did business – I mean I backed away from him and it was a friendly parting and – but I just didn't want to do business with him.

And what I realized after the fact was that he was coming in and wanting to set the rules and tell me how much he was going to pay and then also he was going to tell me what kind of deals I should be buying. And I don't think guy ever bought a house. I mean maybe one he lived in. But I've honed my skills; I'm the expert on whether it’s a good deal or not. He doesn't know what I'm looking for and I don't have to justify it to him. You know? I know what kind of deals work for me. And what I realized was that with private lenders I set the rules.

And so to answer your question its – I want someone that's going to write me a check and sit back and wait for a bigger check to go cash. And I don't want to be told what I can and can't buy. I don't want them to worry about what houses its going to be on because I want them to think about it like a bank CD that we're going to be on one house and then you get your money back and I go find another deal and then you loan me some more money and that's the next house and not tell me – I just want you to be there when I'm ready to do the deal. And so – they don't ask for points, they don't tell me what percent, they don't tell me how long the loan is going to be for. And what houses I'm going to be doing, using their money on. They write a check and they get a bigger check.