Who private investors usually are
Most first private money comes from people who already know and trust you: friends, family, coworkers, other business owners, and people with money sitting in savings or self-directed IRAs who want a return they can see and touch.
Structure 1: Private loan
The investor lends on one property, secured by a recorded deed of trust. Example: $150,000 at 10% interest-only for 9 months costs the borrower $11,250 in interest. The investor knows the exact return; the operator keeps all the profit above it.
Structure 2: Equity split
The investor funds the deal, the operator does the work, and they split the profit. Example: a flip with $40,000 profit split 50/50 gives each $20,000. Splits vary, often with a preferred return to the investor first, such as 8%, before profits are shared.
What to show an investor
- The property: address, photos, condition.
- The numbers: price, repairs, after-repair value with sold comps, holding and selling costs.
- The worst case: what happens if it runs over or sells for less.
- The security: deed of trust, title policy, insurance, LLC agreement.
- Your experience and team: agent, contractor, title company.
The rules you can't skip
Selling investment interests to multiple people, or promoting returns to the public, can make your offering a security under federal and Mississippi law. Securities generally must be registered or qualify for an exemption such as Regulation D, which has rules on who can invest and how you can advertise. Single, secured private loans with someone you know are treated differently from pooled funds. Talk to a securities attorney before you raise money from more than one person or advertise an opportunity.
How Travis fits in
Operators raising money need deals that hold up to an investor's scrutiny. Travis sources properties through the MLS and motivated sellers, prices them from hand-checked comps, and works with investors and lenders, so the deal you take to your investors is built on real numbers.
Read this before you invest
Every number in this guide is an illustration to show how the math works. It is not a projection, a typical result or an offer. Real deals can lose money.
This is general education, not investment, tax or legal advice, and not an offer to sell or a request to buy any security. Any specific investment is discussed one on one, with written terms, and only after you've had the chance to review it with your own attorney, CPA or financial advisor.
Frequently asked questions
How do beginners raise private money for real estate?+
Usually from people who already know them, starting with one secured loan on one property, with written terms and a clear deal package.
Is raising private money legal?+
Yes, when done correctly. Pooled investments or public promotion of returns can be securities that must be registered or exempt. Ask a securities attorney first.
What's a typical private money interest rate?+
It varies with risk, term and the lender's position. Agree on it in writing; there's no single standard rate.
What is a preferred return?+
A return paid to investors first, such as 8% a year, before the operator shares in profits.
What documents do private lenders need?+
Usually a promissory note, a recorded deed of trust, a title policy naming the lender, and insurance listing the lender.
Talk it through with Travis
No pressure. Tell Travis your goals and he'll walk you through how deals work, with real properties and written terms.
Related guides
This guide is general education, not investment, tax or legal advice, and not an offer to sell or a solicitation to buy any security. Example numbers are illustrations, not projections or typical results. Travis DeLoach is a licensed real estate agent in Mississippi (MS License # S62442) with Luxury Southern Realty.