BiggerPockets

Wow, has the real estate market changed in 2009! Real estate investors have been shut out of traditional mortgage money unless you have a 9000 credit score and a 50 year work history without missing one day of work (ok enough of the weak humor but you get the idea). Even hard money loans are HARD to get as they have all gone out business.

But just as the mortgage market is shunning the real estate investor - we are starting to see signs that the real estate marketing is starting to bottom and home prices have even gone up in some markets.

So how do you take advantage of this buying opportunity if you can not get mortgage money from traditional sources?

Private lending is the answer. You can start borrowing money from private lenders to fund your real estate investments. Raising private money allows you to take advantage of the low prices without ever using any of your own cash or personal credit.

There are several significant benefits and advantages of private money lending compared to mortgage money or hard money lending.

First, you can begin buying more houses for "all cash" offers and drive significant discounts from sellers who are highly motivate to get cash versus waiting and hoping another buyer will get a mortgage approval.

Second, very simple paperwork with a typical private lender transaction only requires 3 or 4 documents with less than 20 pages.

Third, you control the terms and conditions under which you will borrow money and the lender will lend. You tell the lenders what rates of interest you will pay, how long the term is and all the other conditions are set by you not a bank or hard money lender.

Finally, you can turn many non-deals with no equity into super profitable deals with substantial equity by paying off existing debt at a discount... using private money.

Six Steps to develop a private money program for real estate investors:

1. Develop your private lending program and the terms and conditions under which you will borrow money and repay your lenders
2. Build your info/credibility kit to establish yourself as real estate investing expert
3. Create a marketing plan with 5 to 10 different marketing techniques to attract potential private lenders
4. Create your group or one-on-one presentation
5. Schedule group or one-on-one meetings and follow-up with potential lenders
6. Present and close deals with your potential lenders

Given the new market realities, private lending may be the only option if you want to buy and own real estate investments and take advantage of the low prices.

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