Private Money Partnering

Lenders…Investors…Partners

Chapter J (continued)

Different Priorities
Words To The Wise

SCOTT: I was just real happy to get the money. At this point we had already closed on the house and we just needed the renovation money. We had the house sitting here that we were making payments on, that we though would be easy to get through a money person. Now we’re having a tough time getting in touch with him and getting a commitment from him and now we’re
starting to panic because we have money coming out for this one
and nothing going on. It’s sitting there needing the lawn mowed and.. With money brokers, I'm leaning, they won't give you the money if it’s not the deal that they need, so they'll give you the $15,000 or the $10,000 and if you don't perform, they've got a house, plus their points, plus their interest. That’s the whole deal with them. It’s a pretty good deal, if you don't perform.

MARGE: So he’s not highly motivated to make sure that you rehab that house because he could take it from you and rehab it himself?

SCOTT: Well, he’s very prominent in the business circle, so he could, but he’s just not a very good businessman.

MARGE: Who’s in control?

SCOTT: Not me, unfortunately.

MARGE: so the next time you do a venture, you will probably look for somebody who’s less of a money lender and more of a partner.

SCOTT, Right, so we could get a more prominent position and tell them what’s going on.

MARGE: And part of that might come from not doing the deals unless you have the money backed up already. And the offset to that is sometimes you’re going to lose those deals because you didn't act fast enough.

SCOTT: That hurts, doesn't it?

MARGE: That’s real.

LAURA: Sometimes you can just tie them up and then we'll sign the
contract with somebody else even if we can't come up with the
funding. At least that way you’re not losing everything. You
could at least get something, if it’s a good enough deal and
you tie it up.

SCOTT: Flip it.

LAURA: Yes, just assign it to another investor, worst case scenario.

MARGE: That’s right, you can always get something.

When I first started, I knew of someone who approached life and partnerships with this philosophy: “I'll stand in the middle of the swamp, back to back with my partner, and fight my way out of it.” What have we got? We've got an adversary attitude to the world. There are both positive and negative aspects to this attitude. Is that style compatible with yours?

If you have private investors as component partners on a venture, is it hard and fold and tough? What do you want it to be? You would like it to be friendly and compatible. This can happen if there’s communication and you've established a common goal.

Lenders - Investors - Partners - Chapter J (continued)