private lender list

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Karen MargraveBusiness Member
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Realtor, General Contractor, and Developer · Redding, CA · Member since 2009 · 7k+ posts · 4k+ votes
13y

I think there are two trains of thought when this question is posed. Yes, private money borrowed from friends and relatives is just that, private money. However; I think often time people on here like Larry Oconnor are speaking of loans made through Mortgage Brokers funded by private individuals.

It is possible to find legitimate private and hard money mortgage brokers by doing a search online. In fact, PB has a list of hard money lenders. Not all private lenders are hard money lenders, and not all hard money lenders are loan sharks.

Maybe Don Konipol can offer some insight for Larry and others.

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  • Jeff S.
    Lender · Los Angeles, CA · Member since 2009 · 1k+ posts · 2k+ votes
    13y

    It's bull.

    If you mean sites like PrivateMoneyGoldmine, here’s a link with several reviews. Private money is loaned on relationships, not websites, or lists you buy.

    Jeff

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  • Will BarnardPro Member
    Moderator
    Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
    13y

    I second what Jeff stated. Most of these lists or sites have hard money lenders calling themselves private money. They are not one in the same.

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  • Mark Ferguson
    Flipper/Rehabber · Greeley, CO · Member since 2013 · 2k+ posts · 1k+ votes
    13y

    I third it! I have called a bunch of the so-called private money lenders and they are exactly like a hard money lender.

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  • Karen MargraveBusiness Member
    Moderator
    Realtor, General Contractor, and Developer · Redding, CA · Member since 2009 · 7k+ posts · 4k+ votes
    13y

    I think there are two trains of thought when this question is posed. Yes, private money borrowed from friends and relatives is just that, private money. However; I think often time people on here like Larry Oconnor are speaking of loans made through Mortgage Brokers funded by private individuals.

    It is possible to find legitimate private and hard money mortgage brokers by doing a search online. In fact, PB has a list of hard money lenders. Not all private lenders are hard money lenders, and not all hard money lenders are loan sharks.

    Maybe Don Konipol can offer some insight for Larry and others.

    1Reply
  • Ann Bellamy
    Lender · Tyngsboro, MA · Member since 2009 · 3k+ posts · 2k+ votes
    13y

    I agree, many people lending their own money call themselves private lenders, because it sounds better, but are charging hard money rates.

    The distinction is very blurry, especially at the local level. The other night I had someone come up to me (I was standing in front of my marketing materials advertising my lending) and tell me he didn't want to use hard money because it was too scary, but would I teach him how to find other private lenders. Unfortunately I couldn't catch myself before laughing out loud.

    A true private lender list is a contradiction in terms. If they are advertising on a list, they are not your Aunty Jane.

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  • Ben Reese
    Real Estate Investor · Driggs, ID · Member since 2008 · 60 posts · 21 votes
    13y

    I have to agree with Ann Bellamy. "Private Money" and "Hard Money" are nebulous terms at best, but I have come to think that "Private" implies some form of prior relationship between lender & borrower whereas "Hard Money" means the loan is made, not against the borrower's credit, but against the "hard" asset.

    Even though I am essentially a HM lender, I term myself as a private lender because: 1) not everyone is even familiar with the term "hard money", and 2) the loans I make are with either my own private funds or pooled with those of a small group of close friends. But like a HM lender I make loans without much consideration to the borrower's credit and instead consider the asset type/quality, title, and LTV. I will however research the general character of the borrower and strive to avoid any obvious trouble-makers. Once I find a loan that meets my criteria it will be made at 10-12% and 0-2 points.

    While it is easy to assume that HM lenders are sharks, consider that many HM lenders are investor funded and as such must constantly recruit investors, pay those investors 8-12%, cover the cost of an initial Reg D filing, and meet the ongoing overhead of salaries, office expenses and so on. I doubt I could do all that for 18%!

    As for finding a list of lender's, the problem small lender's like me have (and a likely reason there is no list of good small lenders )is that solicitation gets us in trouble. What with state regulations, the SAFE act and our inability to solicit investors, we have to keep a low profile, making this a word of mouth business.

    So if I were looking for a Private Lender I would put the word out to local mortgage companies/brokers, title companies and attorneys.

    1Reply
  • Don KonipolBusiness Member
    Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
    13y

    Although I don't agree with the definition, many real estate investors belief that hard money lenders are sophisticated investors who want to earn 12% + points on their money, while private lenders are relatively unsophisticated people thrilled to earn a return above bank rates - like 6-8%.

    In either case the borrower retains liability for paying the loan, and can of course be sued for any deficiency upon default - assuming a personal guarantee. However, an active investor using private money from individuals assumes an additional risk - that of securities law violations. If these loans are securities they need to comply with either Federal or state regulations.

    So if the borrower resides in the same state as the property securing the loan and the lender making the loan, then it is intrastate and regulated by state securities laws. Most states, like the Federal Gov't, have safe harbor exemptions from registration for private offerings,; as long as there is no public solicitation and advertising, and a prior relationship exists between the borrower and lender, the "offering" is exempt from securities registration. For a private offering a maximum number of investor - usually 35 - can be non accredited. So obviously one lender is under the 35 number, thereby allowing the private financing to comply with the exemption from registration.

    Most of the legal problems occur with mass marketing, advertising and general solicitation. The small investor doing a couple of transactions with private lenders is safe - as long as full disclosure is provided, and the lender has the capacity to legally enter into a contract.

    Borrowing by an investor from an individual is peer to peer lending - nothing wrong with that as long as the lender has the ability to evaluate the risk. So borrowers are best off borrowing from someone with some financial sophistication - however in any case no one is going to complain if they are paid back on time.

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  • Paul Crowson
    Investor · Conroe, TX · Member since 2012 · 71 posts · 8 votes
    13y

    Thanks Don Konipol, for sharing this. I was at first frustrated here in Houston, didn't understand "private money lending" ....but it is just that....private.....and to try to find it without a personal relationship between the lender and borrower i.e. "institutionalizing" is like trying to call an apple an orange....they are all fruit.....but very different.....uhmmmmm did I just call some of us fruits?

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  • Blake Stevens
    Investor · Fort Collins, CO · Member since 2011 · 38 posts · 14 votes
    12y

    My title company business developement agent showed me how our county recoords a field Private Lender when it is just an individual on the note and deed of trust. This is a two step process and I haven't done step two yet. They pulled that list of private lenders, there are a lot more non fix and flip private loans that I would have thought. 2nd step is to pull the recording number, send it to the county and pay to pull the 1st two pages of the note where generally the lenders address is listed so that I can mail them. Some people also mail high net worth etc... I was just searching for an interesting old thread I remember on this topic for a list criteria I remember that was mentioned.

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