Private Lending Secrets Every Investor Should Know with Mike Seidl
In the evolving world of real estate investing, there’s one thing that can make or break your next big project: access to capital. Whether you're a seasoned investor or a beginner, understanding the nuances of private lending can be a game-changer. On this episode of the REI Hacker Podcast, we had the privilege of speaking with Mike Seidl, cofounder of REI Capital Guys, who has deployed over $20 million in real estate projects since 2017. Mike’s extraordinary journey, combined with his transparent approach to lending, offers a masterclass in building relationships, understanding investments, and making smart financial decisions. Let’s dive into the valuable insights shared by Mike during this captivating discussion.
A Journey from Helping People to Financing Projects
Mike Seidl’s path wasn’t a straight line to private lending. With a background in economics from NYU and early experience in mental health and social services, Mike honed his ability to understand people and their motivations. “For me, it was a necessity,” Mike shared, reflecting on his move into entrepreneurship. He built two successful businesses, including a medical alert system company that he sold to a public firm in 1998, and a construction company specializing in property damage repairs. After selling his second business, he transitioned into private lending, fueled by his desire for greater control and consistency in investments.
“I’ve always been driven by helping people, whether through social services or now by cutting a check,” Mike explained. His ability to combine financial expertise with a people-first mindset sets him apart in the lending world.
Private Lending vs. Hard Money: What’s the Difference?
One of the key takeaways from Mike’s insights is understanding the critical differences between private and hard money lending. While these terms are often used interchangeably, Mike is adamant that they’re not the same. “Hard money lending is driven by institutional capital, and it’s all about volume and clinical decision-making. Private lending, on the other hand, is relationship-based, flexible, and personalized,” Mike emphasized.
Here’s how Mike differentiates the two:
Control: Private lenders like Mike use their own capital or funds from a close-knit network, allowing them to make quicker, more flexible decisions.
Relationship-Based: Unlike hard money lenders, private lenders prioritize trust and long-term connections with borrowers. “If you call me, I’m the one making the decision,” Mike shared.
Resilience in Downturns: Institutional lenders often pull back during economic uncertainty, whereas private lenders with strong relationships remain reliable.
Building the Relationship Capital
One golden nugget from Mike’s advice is to avoid being “deal desperate.” He recommends building relationships with private lenders long before you have a project. “Relationship capital is everything,” Mike explained. “If you’re reaching out only when you’re desperate, you’re already at a disadvantage.”
To make a strong impression, Mike advises:
Be Professional: Present your deal with organized, detailed information to show you’ve done your homework.
Understand Your Numbers: Know your margins, costs, and exit strategies inside out.
Communicate Clearly: Respond promptly to requests for information and respect the lender’s time.
For Mike, the borrower’s character is just as important as the deal itself. “A good operator won’t bring a bad deal to the table,” he said. “It’s all about the person behind the project.”
The Strategic Advantages of Private Lending
Mike’s pivot into private lending was sparked by a realization about the hidden fees and lack of transparency in the stock market. “I wanted something safer and more consistent, where I could maintain control,” he shared. Private lending checked all those boxes.
Here’s why Mike believes private lending is a standout option for investors:
First-Position Security: Private lenders are typically in the first position of the capital stack, ensuring safety in case of defaults.
Flexibility: With private capital, loans can be tailored to unique situations, whether it’s a fix-and-flip project or a short-term need for collateralized funds.
Relationship-Driven Decisions: Private lenders can evaluate a borrower’s character and circumstances, offering flexibility that institutional lenders cannot.
Mike told a compelling story about a borrower who needed $2 million within 24 hours to save a deal. Because of their established relationship, Mike was able to fund the loan in just six hours—something unheard of in the hard money world. “It’s all about trust and knowing the person you’re working with,” Mike said.
Advice for Aspiring Borrowers
For those just getting started in real estate investing, Mike had some straightforward advice: “Don’t wing it. Build relationships ahead of time, and understand your deals inside out.” He also stressed the importance of being transparent and professional, noting that a strong first impression can pave the way for long-term partnerships.
Here are Mike’s key tips for new investors:
Start building relationships with private lenders before you need funding.
Present organized, detailed information about your deals.
Always have a backup plan, including multiple lending options.
Why REI Capital Guys Stands Out
What makes Mike’s business unique is his human-centered approach to lending. “I don’t want to foreclose on anyone. I want to help them succeed,” he shared. By prioritizing relationships and tailoring loans to individual needs, Mike’s firm, REI Capital Guys, has become a trusted partner for many investors.
Mike summed it up best when he said, “A good loan should just be paperwork to make the lawyers happy. If you have to pull out the paperwork, you’ve bet on the wrong horse.” His focus on finding the right partners and building strong connections ensures long-term success for all parties involved.
Final Thoughts
The world of private lending isn’t just about numbers; it’s about people, relationships, and shared success. Mike Seidl’s journey from social services to lending millions in real estate projects is a testament to the power of trust and understanding in business. Whether you’re looking to secure funding for your next project or considering a career in private lending, Mike’s insights offer a clear roadmap to success.
Are you ready to build your relationship capital and elevate your real estate game? Reach out to Mike and the team at REI Capital Guys to learn how they can support your investment journey. Visit REICapitalGuys.com or email Mike directly at [email protected].
What are your thoughts on private lending? Do you see it as a safer and more flexible alternative to traditional financing? Share your opinions in the comments below!
PARTNERS FOR SUCCESSFUL REAL ESTATE JOURNEY!
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