- Mike Gorius and Kevin Hart choose private lenders despite the higher interest rates.
- The main advantage of working with a private lender rather than a traditional lender is speed.
- Finding people with capital is summed up in networking, leveraging social media and cold calls.
As of March 2025, Mortgage fees It is hovered about 6.4%.
Real estate investors Mike Gorius and Kevin Hart are willing to pay nearly twice the rate to work with private money lenders.
The main reasons are speed and efficiency.
Gorius told Business Insider that “it has far fewer documents and far fewer hoops to jump off” compared to his work with traditional lenders.
He and Hart quit their W-2 jobs and invested in real estate. Pursuing economic independencemainly wholesale, wholetail and flip in Louisville. It also owns over 20 rental properties, including short-term, medium-term and long-term, and is bi-eyed by reviewing settlement statements and closure documents.
Gorius explained that there are three main ways to borrow money in his industry. That is, you can be a private money lender, a hard money lender, or a traditional lender. Traditional lenders generally offer the lowest rates, but hard money lenders tend to be the most expensive.
“For now, what we're having this conversation is, what we're seeing is a 10% to 12% interest rate for private money lenders,” he said. “You can see it between 11% and 13% of hard money lenders. They're usually a bit higher because they actually have staff and office buildings. If you pass Fannie Mae and Freddie Mac, the interest rate is 6% to 7%.”
Work with PMLS to quickly close your transactions
Private lenders can't compete with traditional lenders at cost, but can offer speed. This is important for Gorius and Hart, who close each week.
“Kevin has all the experience, so we do our own testing and we work with out-of-market sellers who work with us at prices, so there's no need to do any ratings,” Gorius said. “Things can move much faster. That's to make the property available for purchase in just a few weeks or days.”
Gorius said that while the fastest they closed on a deal was eight days, working with traditional lenders takes at least 30 days, requiring more paperwork and headaches.
Gorius formed an official business partnership with Hart in 2024 under the Joe Home Buyer Franchise. Courtesy of Mike Gorius
When it comes to carrying out the deal, there are several parties in the room. “Because these people are scattered throughout the US, we all meet at the closing table, so there are sellers, title lawyers, US and essentially banks.
Gorius cites an example of a standard deal for him and Hart in Louisville. This is a flip that costs around $150,000.
“Like a bank, a private money lender deposits $150,000 in escrow. $100,000 will be sent to the seller. “The deed is my name and Kevin's name, or our name, followed by an extra $50,000 of $50,000, so $50,000 may be used in your bank account for home rehabilitation.”
The terminology depends on the lender's level of comfort.
“Some people want to pay interest only monthly to know that we still have skin in the game,” Gorius said. “Other people are fine with all the interest payments at the end.”
Once the rehabilitation is complete and Gorius and Hart are ready to sell, the new buyer deposits the selling price with Escrow, and the title lawyer will ensure that the individual money lender will earn interest in addition to the initial $150,000 return. Gorius and Hart collect the remaining profits.
How to Find PMLS
Finding a private money lender usually requires networking and cold calls.
Before Gorius built a network of lenders, he started with 900 contacts on his mobile phone.
“I texted them all and said, 'Hey, I know what I talked about yesterday.' Or, “I know we haven't spoken for years, but I know that I'm inspiring now with real estate.
Then, “Of the 900, we get nine out of 900 people who actually say yes, respond and have the next step.”
Lean on what you can offer for your friends, ex-co-workers, or someone you are reaching out. In this case, it's a handoff opportunity where you can invest in real estate and earn a greater profit with your money than if you left it sitting in your bank account.
Another strategy Gorius uses is to post on social media and LinkedIn. In one post he detailed his first flip, where he put his cash in $18,000 and doubled his money ten weeks later.
“I made a coordinated post about how if I used another person's $18,000 in 10 weeks, they might have had a solid benefit on it,” he said. “I was able to raise $280,000 from that one LinkedIn post.”