Finding Private Money Lenders

Rehabbing & House Flipping
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Finding Private Money Lenders

Travis Carpenter
Flipper/Rehabber · Dayton, OH · Member since 2011 · 14 posts · 2 votes

Looking for ways to reach out to Private Money Lenders in my area. Actual private money lenders, not hard money lenders. Any suggestions? - Thank you in advance

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Stinson Bland
Wholesaler · Dallas, TX · Member since 2011 · 294 posts · 152 votes
14y

It is all about networking with people that have money they want to invest. It is really pretty simple…

•Meet people that have money to invest
•Befriend these people
•Tell them what you do
•Tell them about your experience
•Explain to them how you use private money to complete projects and pay a good interest rate
•Tell them about real life scenarios where people made money investing into your projects
•Explain to them how these deals are structured and how their investment is protected
•Present them with an opportunity to make money in real estate using your expertise
•Offer them referrals to other investors that have been happy with their returns
•Close the deal
•Complete the project
•Pay them their profit
•Repeat

This conversation could happen in the matter of minutes or over several months… depending on your experience and sales ability.

I’d advise that you speak to an attorney before you raise any capital (a Real Estate Attorney is preferred). It is also advisable that you have a thorough understanding of the legalities and how to structure a real estate investment.

Good luck.

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  • Mark UpdegraffBusiness Member
    Real Estate Broker · Rochester, NY · Member since 2010 · 1k+ posts · 701 votes
    14y

    country club?
    cigar shop?

    :D
    Sorry, I couldn't resist

    Podcast Guest on Show #112
    Updegraff Group Realty4.746 Reviews
    WebsiteView Page
    1Reply
  • Steve Babiak
    Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
    14y

    Your county recorder may allow you to just search for Mortgage or Deed of Trust documents. Find those where the party doing the loan is not your normal bank-type lender; that gets you to HML and other private funding sources. Filter the HML from that list.

    9Reply
  • Stinson Bland
    Wholesaler · Dallas, TX · Member since 2011 · 294 posts · 152 votes
    14y

    It is all about networking with people that have money they want to invest. It is really pretty simple…

    •Meet people that have money to invest
    •Befriend these people
    •Tell them what you do
    •Tell them about your experience
    •Explain to them how you use private money to complete projects and pay a good interest rate
    •Tell them about real life scenarios where people made money investing into your projects
    •Explain to them how these deals are structured and how their investment is protected
    •Present them with an opportunity to make money in real estate using your expertise
    •Offer them referrals to other investors that have been happy with their returns
    •Close the deal
    •Complete the project
    •Pay them their profit
    •Repeat

    This conversation could happen in the matter of minutes or over several months… depending on your experience and sales ability.

    I’d advise that you speak to an attorney before you raise any capital (a Real Estate Attorney is preferred). It is also advisable that you have a thorough understanding of the legalities and how to structure a real estate investment.

    Good luck.

    17Reply
  • Chris Martin
    Investor · Willow Spring, NC · Member since 2009 · 5k+ posts · 3k+ votes
    14y

    I voted up Steve's post since public record is where you can get the most traction. Look for a 'non-financial' grantee on a mortgage, and don't exclude self directed IRAs (e.g. Equity Trust Company). Filter out docs where last name of grantor and grantee are the same (family members) or the grantee is the prior owner (seller financed deal). While you may be entertained, these people aren't generally going to be ideal for what you are looking for.

    Send them a snail mail letter. In the letter say something to the effect 'From public record, I see that you are a mortgage holder for Property A. I would like to buy you a Starbucks coffee and bagel (see map below) 2.3 miles from your address on February 25 at 9:00AM. Another time is fine if this time and day is not convenient. I am looking for ways to reach out to Private Money Lenders in my area. I would like to talk to actual private money lenders, not hard money lenders. There are no strings attached. My goal is to learn about real estate lending and you are, according to public record, someone who is active in real estate...'

    Then provide your contact information and reiterate that they need to confirm your meeting.

    If the meeting goes as planned, you need to know all about their deal and them... before you step into Starbucks. Then Stinson's list (voted it up too) is great. Just be prepared when the time comes. And don't force the issue. I'd say the first 4 bullets are fine for the first meeting, then the rest of the bullets come later. All this depends on your experience and history.

    Obviously adjust the details and locations as necessary.

    14Reply
  • Ziv Magen
    Fukuoka, Fukuoka · Member since 2012 · 148 posts · 29 votes
    14y

    Stinson Bland summed it all up perfectly. Couldn't agree more.

    Be honest, straight forward and practical, know your subject, and present it well. Practice and experience make it perfect.

    Ziv Magen

    0Reply
  • Mike Jakobczak
    Real Estate Investor · Toronto, Ontario · Member since 2010 · 413 posts · 114 votes
    14y

    One of the best ways to find private money lenders is where "like minded" investors hang out. I'd suggest going to local real estate markets. I'd even traveling to some that are not in your direct areas where you buy.

    Then if you are confident in your numbers and can give solid returns, better then some of the local areas you visit. While your at these seminars/meetings hand out some business cards and introduce yourself and what you do.

    One of my investor friends would do this all the time. He actively buys in one of the hottest rental areas in Canada and would simply go to different meetings and his introduction line would be

    "Hello I'm ________, and I buy in the hottest rental market in Canada. If your interested I'm very actively working with other investors. Here's my card, call me"

    He'd pick up investors like this all the time.

    Hope this helps.

    2Reply
  • Kent Bergsagel
    Realtor · Western WA · Member since 2012 · 25 posts · 7 votes
    14y

    S Bland is right.
    I started to talk with my mortgage lender/officer who new a few private money guys looking to invest. I was reffered to them and started a relationship.

    0Reply
  • David Wedemire
    Real Estate Investor · Bellingham, WA · Member since 2008 · 407 posts · 90 votes
    14y

    When you talk to any potential investors you have to be knowledgeable in your area of investment. Don't try to bluff cause they will smell that. Keep expectation on returns within reasonable strike zones. Listen to what they ask and probe their wants. It's all about networking. You get one and then another comes from them and so on.

    0Reply
  • Karen MargraveBusiness Member
    Moderator
    Realtor, General Contractor, and Developer · Redding, CA · Member since 2009 · 7k+ posts · 4k+ votes
    14y

    Why not go the direct route, and googl private lenders in your area, etc.? Put a post on BP looking for investors, and layout your specifics, how much you need, what is the property that will secure the loan, appraisal amount, how long do you need it, ROI, ARV, etc . You can also advertise in various publications seeking investors, and note principals only if you don't want to deal with brokers. Personally, I'd allow brokers, as they have investors, know what they're doing and what each lenders criteria is, and you'll waste less time.

    2Reply
  • Tom St. John
    Real Estate Investor · Weaverville, NC · Member since 2012 · 11 posts · 3 votes
    14y

    Travis,

    You should do a search on 'Soliciting Private Money' and various other titles on the subject on this site. There have been some great discussions on what is and what is not allowed when going after private money. One particular thread concerning SEC considerations is extremely important. Read the discussions and educate yourself as much as possible before venturing out in search of funds.

    Best of luck,

    Tom

    2Reply
  • Jon Klaus
    Developer · Garland, TX · Member since 2008 · 8k+ posts · 4k+ votes
    14y

    Adam Davis has written a lot of quality content on raising private money on his BP blog.

    http://www.biggerpockets.com/blogs/862-ultimate-private-money

    1Reply
  • Joshua D.Pro Member
    BiggerPockets Founder · HI · Member since 2008 · 16k+ posts · 5k+ votes
    13y

    We just added a fantastic new post on PRIVATE MONEY LENDERS on the BiggerPockets Blog:

    Private Money Lenders: Who They Are & How to Find Them

    I thought those people following this thread would find it valuable.

    Podcast Guest on Show #100
    2Reply
  • Joffrey Long
    Lender · Los Angeles, CA · Member since 2012 · 147 posts · 76 votes
    13y

    I'm a California Hard Money Lender so you would have to find someone local, but I would suggest:

    1) escrow or title company people, who would know who is funding the hard money deals

    2) CERTAIN real estate agents, who may be aware of the sources

    3) Certain loan officers will be aware of the hard money sources

    4) Appraisers may also know who is doing hard money

    These are all sources of people who know who is really funding these deals.

    Joffrey Long

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

    Every person we've loaned to, we met at a real estate club. There are plenty who loan their own money, secured by real estate, and a well-attended REI club will attract them.

    I know this thread is dated, @Travis Carpenter, but Cincinnati has a great REI club not far from you.

    The benefit is you should be able to find experienced private lenders at a good REI club. They'll know the ropes, the law, have established criteria, properly vetted paperwork, and should be knowledgeable enough to steer you toward or away from deals you bring. In CA at least, if they charge more than 10% annualized, they have to use a broker. These are also resources you can use.

    Most flippers will not share their private lending sources, but they might tell you what brokers they’ve worked with. Experienced brokers also hang around real estate clubs. They often know which of their private lenders have money available and they should be willing to introduce you to them.

    As important as who to use, is who not to. The article Josh cited states, ”I would also suggest only taking capital from friends and family members who can afford to lose the investment. That way, if the investment does turn out to be bad, at least you won’t lose valuable relationships.”

    What?!?!

    I guarantee the author of that blog never met my family. And what really wealthy friend doesn’t mind you losing a bundle of their hard earned cash? Forgive and forget? C’mon. This is not just silly; it’s bad advice. Tempting and easy as they might be, it’s always best to keep your friends and relatives away from your business dealings.

    Jeff

    0Reply
  • Leonard Zella
    Multi-family Investor · Freeport, NY · Member since 2014 · 17 posts · 2 votes
    12y

    I am new to this site and forum. I would just like to thank all that contribute as there is more information here then one could ever absorb although I am trying.

    0Reply
  • Sharon Leigh
    Collingswood, NJ · Member since 2015 · 25 posts · 5 votes
    11y

    @Stinton ..I appreciate your post .Do you have update information since things might have changed in the market in 2015.

    1Reply
  • Dylin Graham
    Denver, CO · Member since 2015 · 10 posts · 1 vote
    11y
    Originally posted by @Stinson Bland:

    It is all about networking with people that have money they want to invest. It is really pretty simple…

    •Meet people that have money to invest
    •Befriend these people
    •Tell them what you do
    •Tell them about your experience
    •Explain to them how you use private money to complete projects and pay a good interest rate
    •Tell them about real life scenarios where people made money investing into your projects
    •Explain to them how these deals are structured and how their investment is protected
    •Present them with an opportunity to make money in real estate using your expertise
    •Offer them referrals to other investors that have been happy with their returns
    •Close the deal
    •Complete the project
    •Pay them their profit
    •Repeat

    This conversation could happen in the matter of minutes or over several months… depending on your experience and sales ability.

    I’d advise that you speak to an attorney before you raise any capital (a Real Estate Attorney is preferred). It is also advisable that you have a thorough understanding of the legalities and how to structure a real estate investment.

    Good luck.

     Where would I find one who has money and give them a business plan and where can I go to learn about a business plan??

    1Reply
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