PILLAR 01 · WEALTH FOUNDATIONS Evergreen Education EP 089

Private Money for Real Estate Investors: Financing When Banks Say No (Strategy 6/6)

A solo episode with Dalia Barsoum, Principal Broker, Streetwise Mortgages

LISTEN ON ▶ YouTube

6 min · December 30, 2025 · 47 views

WHAT YOU'LL LEARN

How private money differs from bank and alternative lender financing, and why it is considered the most expensive capital available to real estate investors.
The ideal use cases for private lending, including short-term renovation projects, flips, and bridge financing, and why it is dangerous for long-term buy-and-hold strategies.
How to structure a private loan by extracting equity from an existing property when traditional refinancing options are maxed out or unavailable.
How to layer a private second mortgage behind a bank first mortgage to cover part of your down payment on a new investment purchase.
Why closing a deal with 100% private financing is high-risk and why traditional lenders will refuse to provide a first mortgage if you have no skin in the game.
The critical importance of having a clear exit strategy—such as a refinance or sale—before accepting private capital, since these loans are short-term and lenders want out at renewal.

Show Notes

Timestamps 8

Questions Answered 5

Mentioned In This Episode 1

Private money is the sixth and final proven money strategy for funding your first investment property, and it is often the fastest—but most expensive—capital you can access. In this episode, Dalia Barsoum explains that private money comes from individuals or private lenders outside of the traditional banking system, arranged either through a mortgage broker or your personal network. These loans are typically short-term, ranging from three months to two years, and while they offer speed and light documentation requirements, they carry interest rates as high as 13% to 14% plus additional lender and broker fees. Dalia breaks down why this capital is best reserved for temporary, value-add projects like flips or renovation-to-refinance deals, and why deploying it on a long-term hold will quickly destroy your cash flow.

You will learn exactly how to structure private money in two practical ways: first, by extracting trapped equity from an existing property through a private loan, and second, by layering a private second mortgage behind a bank first to bridge a down payment gap. Dalia also issues a strong warning against 100% private financing, explaining that traditional lenders want to see skin in the game and that closing fully private is both risky and costly. Most importantly, she emphasizes that you should never take private money without a clear exit strategy—whether that is a refinance or a sale—because these lenders want out when the short term is up. The episode wraps with a full recap of all six money strategies and an invitation to book a complimentary planning session with the team.

00:00:06 Introduction to Private Money → 00:00:48 The Speed vs. Cost Trade-Off → 00:02:02 Structure 1: Extracting Equity from Existing Properties → 00:02:48 Structure 2: Private Second Mortgage for Down Payment → 00:03:41 The Danger of 100% Private Financing → 00:04:30 The Importance of a Clear Exit Strategy → 00:04:55 Recap of All Six Proven Money Strategies → 00:05:47 Book Your Complimentary Planning Session →

What is private money in real estate investing?

Private money is capital sourced from individuals or private lenders outside of traditional banks and alternative lenders. It is typically arranged through a mortgage broker or your personal network and comes in the form of short-term loans ranging from a few months to two years.

How much does private money cost?

Private money is the most expensive financing option available, with interest rates that can reach 13% to 14%. There are also additional costs to account for, including fees charged by the private lender and the mortgage broker arranging the loan.

What is the best way to use private money for an investment property?

Private money works best as a temporary stepping stone for short-term projects where you will improve the property's condition and either flip it or refinance to pay off the loan. Using it for a long-term hold is risky because the high interest rate will quickly eat into your cash flow.

Can I use a private second mortgage for my down payment?

Yes, one common structure is to use a private second mortgage behind a bank first mortgage. For example, if you need 20% down, a private lender may provide 10% in second position, while the bank provides the first mortgage and you contribute the remaining funds from your own resources.

Why is 100% private financing risky?

Closing a purchase with 100% private money is risky because traditional lenders want to see that you have skin in the game and will typically refuse to provide a first mortgage if your entire down payment is borrowed privately. This forces you to secure both a private first and second mortgage, which is extremely expensive and requires a clear, short-term exit strategy.

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