Comments on: Understanding Private Lending – Part 3: How to Find Private Lenders and Get Funded http://www.biggerpockets.com/renewsblog/2009/08/16/understanding-private-lending-part-3-find-private-lenders-funded/ Learn, Network, Invest Sun, 12 Feb 2012 02:59:04 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Joel Owenshttp://www.biggerpockets.com/renewsblog/2009/08/16/understanding-private-lending-part-3-find-private-lenders-funded/#comment-86745 Joel Owens Sat, 25 Sep 2010 21:52:46 +0000 http://www.biggerpockets.com/renewsblog/?p=6393#comment-86745 Yes to me there is a very clear distinction between hard money and private money. The 15% and 4 to 6 points is very high and I consider them hard money at those rates.Private money is from doctors,lawyers,and other professionals etc. that have a lot of money but no time to speak of.Private money can be had at say 9 or 10% with no points. I have found that using hard money makes doing deals really hard as they suck away most of your profit.Much better for me is a cash partner or JV interest.I list properties all the time for clients and get investors that say "This is all I can offer to make the deal work."We end up selling to another buyer.The fact that you as an investor has to used hard money,or that you can only put 10% down and have to pay a 9% interest rate makes no difference to the sellers value.The property is still say for instance worth 1 million and not the 700k you are offering to make your financing work.So usually we well to a buyer putting 20 to 25% down for a 6 percent interest rate,or they pay cash ( sell sometimes this way but they want a low price),the buyer uses private money,or they do a 100 percent loan with a JV equity share for a collection of net rents.I played the hard money game and you just can't make the numbers work in most cases.You get beat out by other buyers with better forms of financing. Yes to me there is a very clear distinction between hard money and private money. The 15% and 4 to 6 points is very high and I consider them hard money at those rates.

Private money is from doctors,lawyers,and other professionals etc. that have a lot of money but no time to speak of.

Private money can be had at say 9 or 10% with no points. I have found that using hard money makes doing deals really hard as they suck away most of your profit.Much better for me is a cash partner or JV interest.

I list properties all the time for clients and get investors that say “This is all I can offer to make the deal work.”

We end up selling to another buyer.The fact that you as an investor has to used hard money,or that you can only put 10% down and have to pay a 9% interest rate makes no difference to the sellers value.The property is still say for instance worth 1 million and not the 700k you are offering to make your financing work.

So usually we well to a buyer putting 20 to 25% down for a 6 percent interest rate,or they pay cash ( sell sometimes this way but they want a low price),the buyer uses private money,or they do a 100 percent loan with a JV equity share for a collection of net rents.

I played the hard money game and you just can’t make the numbers work in most cases.You get beat out by other buyers with better forms of financing.

]]> By: Justin Piercehttp://www.biggerpockets.com/renewsblog/2009/08/16/understanding-private-lending-part-3-find-private-lenders-funded/#comment-85574 Justin Pierce Wed, 18 Aug 2010 13:06:35 +0000 http://www.biggerpockets.com/renewsblog/?p=6393#comment-85574 True, just be careful what you promise. Make sure you stay clear of the securities and exchange rules. Offering a percentage return on money for mortgages to strangers puts you right smack in the middle of the SEC's radar. You can pitch grandma and avoid the SEC but it that can make for an uncomfortable Thanksgiving dinner. True, just be careful what you promise. Make sure you stay clear of the securities and exchange rules. Offering a percentage return on money for mortgages to strangers puts you right smack in the middle of the SEC’s radar. You can pitch grandma and avoid the SEC but it that can make for an uncomfortable Thanksgiving dinner.

]]> By: Omar Johnsonhttp://www.biggerpockets.com/renewsblog/2009/08/16/understanding-private-lending-part-3-find-private-lenders-funded/#comment-85566 Omar Johnson Wed, 18 Aug 2010 02:57:01 +0000 http://www.biggerpockets.com/renewsblog/?p=6393#comment-85566 Private lenders can be regular people like the postal worker, the retiree etc. The bottom line is these people are usually earning a low return on their money at the bank and can be enticed to join your private lending program simply by you offering them a higher return on their money than they are currently receiving. Private lenders can be regular people like the postal worker, the retiree etc. The bottom line is these people are usually earning a low return on their money at the bank and can be enticed to join your private lending program simply by you offering them a higher return on their money than they are currently receiving.

]]> By: Jayhttp://www.biggerpockets.com/renewsblog/2009/08/16/understanding-private-lending-part-3-find-private-lenders-funded/#comment-84519 Jay Mon, 12 Jul 2010 23:42:18 +0000 http://www.biggerpockets.com/renewsblog/?p=6393#comment-84519 Great article Justin. Your information is still very useful in today's market. Great article Justin. Your information is still very useful in today’s market.

]]> By: ROBERThttp://www.biggerpockets.com/renewsblog/2009/08/16/understanding-private-lending-part-3-find-private-lenders-funded/#comment-71821 ROBERT Tue, 22 Sep 2009 09:49:58 +0000 http://www.biggerpockets.com/renewsblog/?p=6393#comment-71821 Terrific information.Such a blessing for us "Newbies".Love this site!!!!!Will keep this site as my #1 RE reference for THE BEST ADVICE FOR NEWBIES.Thanks and keep on doing what you do. Terrific information.Such a blessing for us “Newbies”.Love this site!!!!!Will keep this site as my #1 RE reference for THE BEST ADVICE FOR NEWBIES.Thanks and keep on doing what you do.

]]> By: Justin Piercehttp://www.biggerpockets.com/renewsblog/2009/08/16/understanding-private-lending-part-3-find-private-lenders-funded/#comment-70878 Justin Pierce Wed, 16 Sep 2009 18:29:34 +0000 http://www.biggerpockets.com/renewsblog/?p=6393#comment-70878 Good points,Brandon. The key point would be to find an actual investor's realtor. I am a realtor and I find all too many realtors do not know much about investing at all. For the most part realtors concentrate on the process of selling a home and how to navigate the pitfalls and legalities of that process. Beleive me that is a full time job in just a standard sale. The other thing is that so many investors keep their funding sources pretty secret. But, it is certainly worth the time to ask.Thanks for the comment.Justin Good points,Brandon. The key point would be to find an actual investor’s realtor. I am a realtor and I find all too many realtors do not know much about investing at all. For the most part realtors concentrate on the process of selling a home and how to navigate the pitfalls and legalities of that process. Beleive me that is a full time job in just a standard sale. The other thing is that so many investors keep their funding sources pretty secret. But, it is certainly worth the time to ask.

Thanks for the comment.

Justin

]]> By: Brandon Turnerhttp://www.biggerpockets.com/renewsblog/2009/08/16/understanding-private-lending-part-3-find-private-lenders-funded/#comment-70856 Brandon Turner Wed, 16 Sep 2009 16:35:22 +0000 http://www.biggerpockets.com/renewsblog/?p=6393#comment-70856 Great Post! I had one more important area to suggest to find hard money lenders - your Realtor (other other Real Estate Agents). Find the real estate agents (or better yet- the brokers if possible) who are working with other investors and ask them for names of lenders. This is how I found mine. My agent knew of several he had worked with, and introduced us. Great Post! I had one more important area to suggest to find hard money lenders – your Realtor (other other Real Estate Agents). Find the real estate agents (or better yet- the brokers if possible) who are working with other investors and ask them for names of lenders. This is how I found mine. My agent knew of several he had worked with, and introduced us.

]]> By: Justin Piercehttp://www.biggerpockets.com/renewsblog/2009/08/16/understanding-private-lending-part-3-find-private-lenders-funded/#comment-67843 Justin Pierce Tue, 18 Aug 2009 15:13:30 +0000 http://www.biggerpockets.com/renewsblog/?p=6393#comment-67843 Dick,Thank you. I am on vacation in the middle of no where so it wasn't easy getting this done. I will continue to do my best. Feel free to ask me questions about things you would like to know. I'm always looking for new ideas for posts.Justin Dick,

Thank you. I am on vacation in the middle of no where so it wasn’t easy getting this done. I will continue to do my best. Feel free to ask me questions about things you would like to know. I’m always looking for new ideas for posts.

Justin

]]> By: Justin Piercehttp://www.biggerpockets.com/renewsblog/2009/08/16/understanding-private-lending-part-3-find-private-lenders-funded/#comment-67842 Justin Pierce Tue, 18 Aug 2009 15:11:18 +0000 http://www.biggerpockets.com/renewsblog/?p=6393#comment-67842 Steve,I am not a lender. I am a heavy consumer of private funds. I do have some good examples of the ads I have responded to. I will get those up. I am in the wilds of Utah right now. I have to come down to the city a couple times a week to get internet access. But, its so nice to be out of communications sometimes. I will be back in my office next week and I'll get those articles for you. Thanks for the comment.Justin Steve,

I am not a lender. I am a heavy consumer of private funds. I do have some good examples of the ads I have responded to. I will get those up. I am in the wilds of Utah right now. I have to come down to the city a couple times a week to get internet access. But, its so nice to be out of communications sometimes. I will be back in my office next week and I’ll get those articles for you. Thanks for the comment.

Justin

]]> By: Dick Rosenhttp://www.biggerpockets.com/renewsblog/2009/08/16/understanding-private-lending-part-3-find-private-lenders-funded/#comment-67774 Dick Rosen Mon, 17 Aug 2009 04:45:43 +0000 http://www.biggerpockets.com/renewsblog/?p=6393#comment-67774 Good stuff Justin, thanks for the post and I look forward to more! Good stuff Justin, thanks for the post and I look forward to more!

]]> By: Stevehttp://www.biggerpockets.com/renewsblog/2009/08/16/understanding-private-lending-part-3-find-private-lenders-funded/#comment-67764 Steve Mon, 17 Aug 2009 00:50:22 +0000 http://www.biggerpockets.com/renewsblog/?p=6393#comment-67764 Do you have some samples of ads you put on CraigsList? Do you offer a specific interest rate? Do you have some samples of ads you put on CraigsList? Do you offer a specific interest rate?

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