Realtor · Houston, TX · Member since 2011 · 916 posts · 296 votes
How do you find hard money lenders or private investors? I've attended my local real estate meetings, posted it on their website, searched Craigslist, and created Craigslist ads. I'm coming to the conclusion that my area just doesn't have any or people do not want to share their money guy. Good deals have come my way with direct mail but I've had to pass due to no cash. Any suggestions?
Look for 'equity partners' (50/50 splits?) instead of debt financing (hard money/private money). Establish a track record and then make the move upwards to private money. You should be able to find plenty of equity partners in your reia. Private money might be a bit harder. Try networking at chamber of commerce meetings, networking functions (where folks with actual money attend - not the ones where folks just want to show up to look good in a suit and hand out business cards as they try to pick up women - lol).
Look for 'equity partners' (50/50 splits?) instead of debt financing (hard money/private money). Establish a track record and then make the move upwards to private money. You should be able to find plenty of equity partners in your reia. Private money might be a bit harder. Try networking at chamber of commerce meetings, networking functions (where folks with actual money attend - not the ones where folks just want to show up to look good in a suit and hand out business cards as they try to pick up women - lol).
I'm surprised you haven't found any leads on hard money lenders at REIA type meetings. Even if they aren't actually in attendance, there must be someone there using hard money.
Many hard money lenders want you to have some of your own cash into the deal, though. So if "no cash" truly means you have no money at all to put into the deal then you're going to have a tough time finding funding.
Private money, OTOH, is, well, private. The lender is someone you know. Discuss what you do with people you know and people you meet. Believe it or not, there is money floating around out there. Talk about what you do an eventually you'll bump into someone with cash and an interest in investing.
Here experience is going to matter. If you can show past deals you've done that have made money, you'll have an easier time finding an investor.
Jon, initially I too found it surprising. 30 minutes north of Fayetteville in the Raleigh area, I am convinced that hard money lenders are not active in this area. I've browsed through thousands (probably tens of thousands) of deeds of trust in 2011 and can't find a HML. Private lenders? Yes. A handful of predominately seller financed deals. People lending with SDIRAs? Yes, 7 so far in 2011 from Equity Trust alone (9 in 2010, 10 in 2009, 14 total in prior years). Hard Money? Can't find them. A huge chunk (90+%) are MERS and Wells Fargo...
Shanequa, the process of finding historic hard money lenders or private investors is in theory relatively simple. Find your county register of deeds. Search for all deed of trust records and, if possible, sort by Grantee. It's a lot easier if the records are online and you can get 100 or more records in one "screen" at a time (or automate using a computer w/ scraper.) Eliminate banks, MERS, credit unions, mortgage companies, etc. What is left has potential.
For example, on 11/2/2011 there were 255 deeds of trust recorded in Wake county. Three (3) were not a bank, MERS, a credit union, or mortgage company. I usually eliminate a D-T where the grantee and grantor have the same last name. That leaves two. One was a seller financed deal (014524-01272) on a house, the other was between a builder (borrower) and a 5.7 acre land owner. So, for finding private lender or HML? 0 for 255. I used to keep the seller financed deals in a data base, then would send a letter to them in 6 months to see if they wanted to sell their note. I stopped because the volume (and my "hit" rate) was too low. Anyway, ...
Pull the lever each day. After a few (10,000 or so) tries, you will have a short list. This list will be 90% "one timer" lenders who won't lend to you.
That's one way to find private money or a HML that actually lends in your area.
What do you think that means? Not enough deals to be bothered with? A bad area for investment?
As I posted in Need Help! Is this a good wholesale deal? "...the "fixerupper" subsegment of the larger Garner & Raleigh area. This market has effectively collapsed over the previous 12 to 18 months, as investors have fled the market. Market demand for such homes is minimal..."
I'm guessing the HML, if they were here, moved on to greener pastures.
Thanks everyone for your suggestions. Since I posted the question, I've found 1 from Craigslist in Charlotte (3hrs away). Hopefully, he doesn't turn out to be a scammer. I'll be putting my packet together tomorrow.
Thanks everyone for your suggestions. Since I posted the question, I've found 1 from Craigslist in Charlotte (3hrs away). Hopefully, he doesn't turn out to be a scammer. I'll be putting my packet together tomorrow.
Yes be careful. Once ran an ad for a private investor in the NY Times and received a call from a 'Dr. Ross' from Washington state. Guy wanted me to fly him in to look at the deal. But didn't want to go through my attorney and didn't want my attorney contacting his. Definitely a scam as I'm sure he would have flown in and walked right past me as he toured NJ on my dime. Verify everything he/she tells you and use an attorney (even though it may not be customary to use one where you are I still would). Good luck.
Networking is best. All of the people we've loaned to or done JVs with have been people we've met on BP. Only had one bad experience.
I suppose it's a lot easier if you have money, and are trying to find where to allocate it, than to not have it and try to find it someone to risk it.
Establish a track record of successful deals you can show prospects.
You DON'T have to find money locally. There are people all over the country with money to invest. It doesn't have to come from NC. We've had much better success leveraging the experience and knowledge of investors around the country by making loans, than buying and holding actual rentals out of state. Huge hassle. Property managers, repairs, tenants...etc.
Do they offer a Haves/Wants section at your local REIA? You could stand in front of the room and let the crowd know you are able to put together good deals and you are looking for a money partner.