Key habits regarding the 150-year generational wealth plan:
1. Consistent family meetings
2. S.M.A.R.T GOALS
3. Accountability Partners
4. Paycheck Routine
5. Credit Report and Score
6. Entrepreneurship
7. Morning Routine
8. Health & Wellness Seminars
9. Real Estate Investing
10. Scholarships
1: S.M.A.R.T. GOALS
Have each family member consistently communicate goals that are:
Specific (What you want to accomplish),
Measurable (How you can measure your progress),
Achievable (Whether you have the skills to achieve the goal),
Relevant (Why you're setting the goal and if it aligns with your overall objectives), and
Time-bound (What the deadline is and if it's realistic)
2: ACCOUNTABILITY PARTNERS
Collectively discuss insights, strategies, and techniques that can help each other reach their goals.
Assign accountability partners and commit to supporting each other, helping each other, encouraging each other, uplifting each other, and holding each other accountable.
3: Monthly Mastermind Group
Have a mastermind session on a monthly basis. Keep the duration of each mastermind session to 60 minutes. The agenda is that each person quickly shares these three things:
#1: A “win” from the previous month,
#2: A new lesson or new resource or new opportunity that you learned from the previous month, and
#3: A goal you have for the upcoming month.
We always run out of time and so, require that each person posts (in the group’s private Facebook group) their responses to those three items. That way, people can easily follow-up with each other regarding things that resonated with them. This system is a game-changer in people’s lives because it opens people up to receiving and giving ideas, resources, and accountability.
4: PAYCHECK ROUTINE
Educate and encourage each person to maintain a good paycheck routine, such as:
50% to 60% to Necessities (but aim to get it much lower)
10% to Building Up Emergency Fund/Special Purchases Fund (use a High-Yield Savings Account or a Money Market Account)
10% - 20% to Investing:
Employer-sponsored plan (only up to the match)
ROTH IRA Stock Index Fund that tracks the S&P 500
Any other accounts (HSAs, Custodian ROTH IRAs, Taxable Brokerage Accounts, etc)
20% to Fun Money (Things that you enjoy and are meaningful and fulfilling), such as Eating-Out, fancy Gym Membership, Therapy/Personal Coach, Vacations, Entertainment, etc.
5: CREDIT REPORTS AND SCORE
Build and maintain a credit score above 760. Print out free copies of your credit reports (one from each of the major credit bureaus: Experian, Equifax, and TransUnion) and meet up with a good mortgage loan officer who has the heart of a teacher and create a game plan for financially preparing yourself to start investing in real estate. Get a credit card and keep the utilization under 10% and always pay on time. Look into getting a top-tier credit card, such as Chase or Capital One.
6: ENTREPRENEURSHIP
Increase your income by turning your hobbies into businesses. Start a side hustle based on things that you are passion about. Register an LLC and get an EIN number and open a business bank account and get a business credit card.
7: MORNING ROUTINE
Develop and maintain a morning routine that nurtures all areas of your health and wellness (Physical, Mental, Spiritual, Financial, and Social)
8: HEALTH & WELLNESS SEMINARS
Host health & wellness seminars, webinars, and mastermind groups focused on these 10 topics:
1: Nutrition
2: Physical Fitness
3: Mental Health
4: Communication Skills
5: Financial Literacy
6: Entrepreneurship
7: Stock Market Investing
8: Real Estate Investing
9: Estate Planning
10: Dating & Marriage Relationships
9: REAL ESTATE
Wisely invest in real estate. Understand how to run the numbers to effectively evaluate a real estate deal. Also, do a monthly P&L statement for each rental property and develop a strong system of property management.
10: SCHOLARSHIPS
Provide scholarships to strategically fund the opening of ROTH IRAs for kids and young adults (and requiring them to learn about financial literacy, such as the power of compound interest and the importance of starting early to invest for retirement).
Financial Milestones:
Create a monthly budget
Create a system for tracking your money on a daily basis
Open a High-Yield Savings Account
Open a ROTH IRA Stock Index Fund
Give 10% of your income to a church or any other charitable organization
Save up an emergency fund of $1,000
Contribute to employer-sponsored retirement plan only if they offer a match and, if so, only contribute up to the match.
Pay off your first debt
Pay off all consumer debt except for car loan, mortgage loan, and student loans
Pay off car loan
Pay off student loans
Reach a credit score above 700
Reach a credit score above 760
Save up an emergency fund of at least 3 months of your living expenses
Save up an emergency fund of at least 6 months of your living expenses
Max out your ROTH IRA Stock Index Fund for the year
Reach at least a net worth above 0
Reach a net worth of at least $1,000
Reach a net worth of at least $5,000
Reach a net worth of at least $10,000
Reach a net worth of at least $50,000
Reach a net worth of at least $100,000
Reach a net worth of at least $250,000
Reach a net worth of at least $500,000
Reach a net worth of at least $1,000,000
Buy you first rental property
Buy your first home
Generate your first $1,000 in passive income
Generate a level of passive income that exceeds your cost of living
2. S.M.A.R.T GOALS
3. Accountability Partners
4. Paycheck Routine
5. Credit Report and Score
6. Entrepreneurship
7. Morning Routine
8. Health & Wellness Seminars
9. Real Estate Investing
10. Scholarships
1: S.M.A.R.T. GOALS
Have each family member consistently communicate goals that are:
Specific (What you want to accomplish),
Measurable (How you can measure your progress),
Achievable (Whether you have the skills to achieve the goal),
Relevant (Why you're setting the goal and if it aligns with your overall objectives), and
Time-bound (What the deadline is and if it's realistic)
2: ACCOUNTABILITY PARTNERS
Collectively discuss insights, strategies, and techniques that can help each other reach their goals.
Assign accountability partners and commit to supporting each other, helping each other, encouraging each other, uplifting each other, and holding each other accountable.
3: Monthly Mastermind Group
Have a mastermind session on a monthly basis. Keep the duration of each mastermind session to 60 minutes. The agenda is that each person quickly shares these three things:
#1: A “win” from the previous month,
#2: A new lesson or new resource or new opportunity that you learned from the previous month, and
#3: A goal you have for the upcoming month.
We always run out of time and so, require that each person posts (in the group’s private Facebook group) their responses to those three items. That way, people can easily follow-up with each other regarding things that resonated with them. This system is a game-changer in people’s lives because it opens people up to receiving and giving ideas, resources, and accountability.
4: PAYCHECK ROUTINE
Educate and encourage each person to maintain a good paycheck routine, such as:
50% to 60% to Necessities (but aim to get it much lower)
10% to Building Up Emergency Fund/Special Purchases Fund (use a High-Yield Savings Account or a Money Market Account)
10% - 20% to Investing:
Employer-sponsored plan (only up to the match)
ROTH IRA Stock Index Fund that tracks the S&P 500
Any other accounts (HSAs, Custodian ROTH IRAs, Taxable Brokerage Accounts, etc)
20% to Fun Money (Things that you enjoy and are meaningful and fulfilling), such as Eating-Out, fancy Gym Membership, Therapy/Personal Coach, Vacations, Entertainment, etc.
5: CREDIT REPORTS AND SCORE
Build and maintain a credit score above 760. Print out free copies of your credit reports (one from each of the major credit bureaus: Experian, Equifax, and TransUnion) and meet up with a good mortgage loan officer who has the heart of a teacher and create a game plan for financially preparing yourself to start investing in real estate. Get a credit card and keep the utilization under 10% and always pay on time. Look into getting a top-tier credit card, such as Chase or Capital One.
6: ENTREPRENEURSHIP
Increase your income by turning your hobbies into businesses. Start a side hustle based on things that you are passion about. Register an LLC and get an EIN number and open a business bank account and get a business credit card.
7: MORNING ROUTINE
Develop and maintain a morning routine that nurtures all areas of your health and wellness (Physical, Mental, Spiritual, Financial, and Social)
8: HEALTH & WELLNESS SEMINARS
Host health & wellness seminars, webinars, and mastermind groups focused on these 10 topics:
1: Nutrition
2: Physical Fitness
3: Mental Health
4: Communication Skills
5: Financial Literacy
6: Entrepreneurship
7: Stock Market Investing
8: Real Estate Investing
9: Estate Planning
10: Dating & Marriage Relationships
9: REAL ESTATE
Wisely invest in real estate. Understand how to run the numbers to effectively evaluate a real estate deal. Also, do a monthly P&L statement for each rental property and develop a strong system of property management.
10: SCHOLARSHIPS
Provide scholarships to strategically fund the opening of ROTH IRAs for kids and young adults (and requiring them to learn about financial literacy, such as the power of compound interest and the importance of starting early to invest for retirement).
Financial Milestones:
Create a monthly budget
Create a system for tracking your money on a daily basis
Open a High-Yield Savings Account
Open a ROTH IRA Stock Index Fund
Give 10% of your income to a church or any other charitable organization
Save up an emergency fund of $1,000
Contribute to employer-sponsored retirement plan only if they offer a match and, if so, only contribute up to the match.
Pay off your first debt
Pay off all consumer debt except for car loan, mortgage loan, and student loans
Pay off car loan
Pay off student loans
Reach a credit score above 700
Reach a credit score above 760
Save up an emergency fund of at least 3 months of your living expenses
Save up an emergency fund of at least 6 months of your living expenses
Max out your ROTH IRA Stock Index Fund for the year
Reach at least a net worth above 0
Reach a net worth of at least $1,000
Reach a net worth of at least $5,000
Reach a net worth of at least $10,000
Reach a net worth of at least $50,000
Reach a net worth of at least $100,000
Reach a net worth of at least $250,000
Reach a net worth of at least $500,000
Reach a net worth of at least $1,000,000
Buy you first rental property
Buy your first home
Generate your first $1,000 in passive income
Generate a level of passive income that exceeds your cost of living
Frequently Asked Questions
What is private money lending in real estate?
Investments in which you lend money to other real estate investors, such as house flippers, who often need to borrow money to fund the purchase and/or rehab of properties.
What is the difference between hard money lending and private money lending?
Hard money lending is when the money comes from an institution. The house flippers have to deal with a sales rep, an underwriter, a loan originator, they have to fill out an application, they have to upload their financial documents, and an appraisal of the property has to be done. So, it’s usually a very long application process. And hard money lenders only fund up to a certain maximum percentage of the deal like maybe 80% or 90% of the deal, depending on the specific situation. And the funds are set up on a draw schedule in which the house flipper receives the money in installments after certain phases of the project are completed. And, with hard money loans, house flippers have to pay monthly interest payments.
In contrast, private money lending is when the money comes from private individuals or private companies that are not financial institutions. So, with private money loans, the house flipper is dealing directly with private individuals or private companies that are providing the funds. So, the only rules and requirements are the ones that are created between the private money lender and the house flipper. And usually, with private money loans, house flippers are able to quickly receive all of the funds without having to go through any type of formal application process and without having to be on any type of draw schedule. And, usually, with private money loans, the house flipper does not have to pay monthly interest payments but rather, they just pay the whole amount (the principal plus all of the interest) at the end of the loan term.
Where do private money lenders access money to invest?
Some invest from their personal savings or checking accounts but others invest from other sources, such as a Self-Directed IRA account (SDIRA), a Home Equity Line Of Credit (HELOC), or even a Cash Value Life Insurance Policy. Side note: For those of you who don’t know what a Self-Directed IRA account is, it is a special type IRA account that gives you the control to use your retirement money to invest in real estate. And in many cases, you can roll your regular retirement fund (like a 401k or a TSP) into a Self-Directed IRA.
What type of documents are involved
Depending on the deal, the type of documents involved can vary. However, we always require a promissory note and a personal guarantee. And, in cases in which we need to really secure the loan, we require a first position lien on the property (or on another property that is owned by the borrower), a title insurance policy, and a builder’s risk insurance policy. Additional documents can include an escrow agreement, a rehab agreement, lien releases, etc.
How does the money flow
Ideally, the money should always flow through a title company through wires.
How much interest do private money lenders charge?
It really depends on the negotiation between the private money lender and the borrower. There are no real industry standards. However, so far, except for a few exceptions, our investment group of private money lenders have been charging in the range of 15% to 20% interest and, on some deals, we even require a percentage of the profit (and no liability regarding any potential loss). In addition, we often charge 1 or 2 points in order to cover the cost such as our analysis time and we require the house flipper to also pay for our wire fees as well as for our attorney fees regarding the preparation of the legal documents. Side Note: “points” are interest percentage points that the borrower pays upfront.
***Disclaimer: The information provided in this post is for informational purposes only and is not meant to take the place of legal or accounting advice. If you want specific advice about your specific situation, make sure to contact your attorney or your CPA.