Like many people, Anthony is disgusted with the skimpy 0.1% interest his bank is paying on savings. He knew that Kim and I, like many real estate investors, borrow our purchase and fix-up money from individuals rather than from banks. He called to say that he would fund our next deal if we’d pay him 5% compounding interest.
The phone conversation led to a face-to-face talk over coffee at Waffle House. Anthony and his wife have good jobs and they’re paid W-2 income. In other words, their tax bracket was killing them.
Being the curious sort, I asked why they wanted to be lenders instead of owning rental property themselves…after all, their tax situation screamed: Own rental property! Anthony explained that they’d heard too many tenant horror stories – there was no way they’d ever consider becoming landlords.
I shared that Kim and I had found our next investment deal. It was a three-bedroom, two-bath ranch in a great neighborhood. The purchase price was…