Welcome to the Managing CRE Risk podcast with Jeremy Goodrich. Today, we have a great conversation for you about debt and cash flow. Our guest is Alex Breshears, private lender, LP investor, and author. We talk about how to limit your risk by understanding capital, how private lending differs from hard money lending, and how to build your capital stack.
Learn more about Alex and her story at shineinsurance.com/managing-commercial-real-estate-risk!
“That’s actually one of the things I love about private lending is that it’s extremely flexible and you can make it anything you want.”
Alex is a private lender. At the beginning of the episode, she explains that private lending and hard money lending are two very different things. As a private lender, Alex and her business have a certain amount of capital that she lends out to people after underwriting their deals. However, hard money lenders’ funds generally come with strings attached. Borrowers have to fit certain standards in order to qualify for loans.
Alex’s advice for people who are interested in becoming a private lender is to be very informed about their state’s laws because brokering has different laws in every state. It’s useful to find a specialized attorney for this process.
“If you’d have a private lender saying they lend in all 50 states then that is a hard money lender calling themselves a private lender.”
Alex shares some things to look out for as an investor when working with a private lender:
- No funds should change hands outside of closing.
- Most private lenders are hyper-local. Therefore, if they’ve done loans in that area, their deeds and trust, and mortgages are public records.
- Ask for references in your market.
- Be aware of people who say they lend in all 50 states, as they’re probably hard money lenders.
“The reason I invest passively is because I want to go out and live actively.”
Alex is an LP investor. She talks about the risks of the capital stack. LP investors are on the top of the capital stack, so if the deal goes wrong, their money is at risk first.
Alex breaks down passive investors into 2 categories – equity multiple investors and cash flow investors. She prefers cash flow investing as it is more reliable by running the numbers. It’s also less risky, as the properties are usually stabilized.
About our Guest, Alex Breshears
Alex Breshears is a private money lender, short-term rental owner, LP investor in syndications, and private lending fund manager. She is also a BiggerPockets published author, with her private lending book “ Lend to Live: Earn Hassle-Free Passive Income in Real Estate with Private Money Lending” hitting shelves in August of 2022. She started an educational Facebook group called Lend2Live: Private Lending Lessons which offers educational lessons, daily posts for discussion, and opportunities to network with other investors about private lending, and various projects that may need funding. Alex is also passionate about financial education and independence for female investors. Alex is a military spouse, dog mom of 4, and seeks to educate others about investing to fit the design of your life. She was a chemistry professor, teaching for a four-year school for the past ten years, with a special focus on pharmacology.
Mentioned in the show:
- Lend2Live: Private Lending Lessons Facebook Group
- Her LinkedIn
- Alex Breshears – Lend to Live: Earn Hassle-Free Passive Income in Real Estate with Private Money Lending
- Jeremy’s LinkedIn
Need an instant insurance ballpark for your next Multifamily deal?! Answer 9 simple questions and we’ll give you a sense of what insurance should be. Visit us here for everything you need to know: https://www.shineinsurance.com/ballpark/
Special thanks to Alex Breshears for taking the time to share so many great insights with us
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