Stop waiting for the “perfect” tax return to start building your wealth.

Let’s be honest: the traditional banking system is not designed for the real estate agent. You have a high-earning potential, but your income looks like a mountain range on a graph. One month you’re closing four deals and feeling like a rockstar; the next, you’re waiting on a delayed short sale and tightening the belt.

When you walk into a big-box bank with two years of “variable commission income” and a stack of write-offs that keep your taxable income low, they don’t see an entrepreneur. They see a risk.

You cannot afford to let a loan officer’s rigid checklist stop you from acquiring your first investment property.

If you want to move from being a “transactional agent” to a “wealth-building investor,” you need to master the art of non-traditional funding. Today is Friday, Investing Day at Keller Williams Realty Integrity Lakes, and we are going to break down the two primary ways you fund a deal when the bank says “no”: Hard Money and Private Money.

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Hard Money: The Professional’s “Bridge”

Hard money lenders are not banks. They are professional lending businesses that care about one thing above all else: The Asset. They don’t care if you had a slow Q4 in 2025. They care if the house you are buying in Minneapolis or Hudson is actually worth what you say it is.

Use hard money when speed and property value are your primary levers.

The Reality of the Numbers

Hard money is expensive. If you aren’t prepared for the cost of capital, you shouldn’t be in the game. Expect these figures:

• Interest Rates: 10% to 14% (typically interest-only payments).
• Points: 1 to 3 points (1 point = 1% of the loan amount) paid at closing.
• Loan-to-Value (LTV): Most will lend 70% to 80% of the purchase price, or 65% to 75% of the After Repair Value (ARV).
• Term Length: 6 to 12 months. This is a sprint, not a marathon.

Why Agents Should Start Here

• Speed of Execution: You can get a “Proof of Funds” letter in 24 hours and close in 7 to 10 days. In a competitive Twin Cities market, this is your superpower.
• Collateral Over Credit: While they may check your credit score (aim for 620+), the equity in the deal is their primary security.
• Less Paperwork: Stop digging for 1099s from three years ago. Focus on the Market Stats and your appraisal.

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Private Money: The Relationship Play

Private money is the “Inner Circle” of funding. These are individuals: friends, family, past clients, or local professionals: who have liquid capital sitting in a low-yield savings account or a volatile 401k and want a better return.

Build your private money network by demonstrating your expertise every single day.

The Terms You Can Negotiate

Because you are dealing with a person, not a corporation, the terms are limited only by your imagination and their comfort level.

• Interest Rates: 6% to 10% is common.
• Points: Often 0 points.
• Security: You provide a Promissory Note and a Mortgage/Deed of Trust to secure their interest in the property.
• The “Win-Win”: You get cheaper capital than hard money; they get a return 4x higher than their savings account.

How to Pitch as a Commission-Based Agent

• Show, Don’t Tell: Use our Off-Market List to show them the types of deals you have access to.
• Leverage Your License: Remind them that you see the market trends before anyone else. You are the “insider.”
• Transparency is King: Have a clear “Exit Strategy.” Tell them exactly how they get their money back (e.g., “I will refinance this into a long-term DSCR loan once the renovation is complete”).

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The “Commission-Proof” Funding Strategy

How do you handle the “gap” when you are starting out? You use your unique position as an agent at Keller Williams Realty Integrity Lakes to offset the risks of your fluctuating income.

Follow this checklist to secure your first loan:

1. Run a Professional P&L: Stop treating your business like a hobby. If you want a lender to trust you, show them you track every dollar. (Check out our Accountability Group Resources for tracking tools).
2. Focus on the 70% Rule: Never pay more than 70% of the ARV minus repairs. If a house is worth $300,000 fixed up and needs $50,000 in work, your max purchase price is $160,000. ($300k * .70 = $210k. $210k – $50k = $160k).
3. Get a “Proof of Funds” Now: Don’t wait until you find a house. Call a hard money lender today and get pre-approved based on your experience and credit.
4. Save Your “Big” Commissions: Set aside 20% of every commission check into a “Deal Fund.” Even with 100% financing, you need “skin in the game” for closing costs and initial holding costs.

“A different result requires doing something different.” : Gary Keller

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Hard Money vs. Private Money: The Comparison Table

Feature	Hard Money	Private Money
Approval Time	Fast (3–7 days)	Variable (Depends on the person)
Cost	High (10–14% + Points)	Lower (6–10%, usually no points)
Documentation	Property-centric (Appraisal, Scope of Work)	Relationship-centric (Trust, Past Performance)
Flexibility	Rigid terms and penalties	Highly negotiable
Reliability	Consistent (They have deep pockets)	Inconsistent (They might back out)

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I Challenge You: Take the First Step Today

How many of you are scrolling through the MLS every morning looking for deals for your clients, but ignoring the ones that could change your net worth?

The reality is this: You will never “save” your way to wealth on commissions alone. Taxes and lifestyle creep will eat it all. You must convert those active commission dollars into passive real estate assets.

Here is your immediate action plan:

• Step 1: Attend our next Mortgage Masterclass to understand how to bridge the gap between hard money and long-term financing.
• Step 2: Identify three people in your database who have mentioned “wanting to get into real estate.” These are your potential private lenders. Schedule a coffee.
• Step 3: Calculate the ARV of one “fixer-upper” in your target zip code. Practice the math until you can do it in your sleep.

Stop being a spectator in the greatest wealth-building industry on earth. You have the license, you have the data, and now you have the funding roadmap.

If you have questions about how to structure your first investment deal or need a referral to a local MN/WI hard money lender, come find me in the office or check our Important Links & Resources.

Let’s get to work.

By Jason Spars
Vice President of Operations
Keller Williams Realty Integrity Lakes

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Disclaimer: Investment involves risk. Always consult with a financial advisor and legal counsel before entering into lending agreements. Rates and terms mentioned are averages and subject to change based on market conditions and individual creditworthiness.