Don’t Let Your Money Burn

Now some investors, they have a huge glut of lazy equity, maybe even half a million or $2 million of lazy equity that they haven’t done. Like I said, I’ve seen investors invest a million dollars in the first year with me, but I think that’s an outlier. Right. I suggest people try things out slowly, hang up for a year.

Make sure we’re competent. And I know we’re competent. We’ve done a lot of deals thus far. I’m just being empathetic to new people coming in because that’s the prudent thing. That’s the thing I would do. I don’t recommend anything that I don’t wouldn’t do at the same time. You got money burning a hole in your head.

And for every billion dollars of Lacy liquidity, you have, you could just stick that into something at 10%, pretty easy. It’s such as HP. I wouldn’t suggest putting all that money in one place or all that money in a private equity deal, but you want to deploy the funds, but you want to do it prudently a nice way of doing this is putting a chunk in private equity to just get it working because the idea is you’re going to get that much.

A lot of the, these deals, they make us put a lot of this money is reserves. So once we hit certain milestones, but we refinance the money out, return a lot of that initial nonprofit equity capital to investors right off the bat. And maybe originally went in with a hundred grand off of equity. Maybe you’re only sitting with 50 grand on a year’s time.

Every year, every deal is different. And I don’t want to set any precedents. But the pref equity is a shorter term lifespan. You’re sticking money in there. You got to think that you’re getting a heck of a lot faster than most people on the traditional equity side. So it can be a strategy thing. The way of thinking about it is you’re putting loading money in, but you’re leapfrogging it too.

Maybe one to three years into the future that, you know, you’re going to get it back, but then you go to redeploy into more of a traditional equity, eight to Sarah. I do this a lot of times. It’s kind of like a short term, one to three years, E in a way that you want to get your money in traditional equity, but you’re waiting for the deals that come around, which, and they’re even frequent.

And if you’re starting out, you may not have good deal flow. You’d likely though, right? So you want to be patient, but you still want to get your money working. And that’s what the private equity option.

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