Mortgages & Creative Financing

How to Build Your List of Local Private Money Lenders

Expertise: Mortgages & Creative Financing, Real Estate News & Commentary, Real Estate Investing Basics
47 Articles Written
Private Lenders

“Raising Money!”

Two words that send quivers down most real estate investors’ spines. Now add to that the need to raise money from third party investors and you have the perfect “fear storm.”

The fear storm causes most real estate investors to feel overwhelmed with SEC, Securities Law, Blue Sky Rules, Meetings/Luncheons….and feel like waves of raising private money are crashing on top of them.

First thing, close your eyes and breathe. I want to teach you to surf these waves through a simple three step system:

Step I- Finding Third Party Investors (List Building)

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Step II- Reaching Them (Marketing to Them)

Step III- Presenting to Them (Drafting a presentation to build credibility

This article will focus on the first step of Finding Third Party Capital Investors – with the intent of helping you build a list of potential and prospective third party capital investors.

Step I- Finding Third Circle Investors

I glanced over ideas on how to find private money lenders from the Third Party circle in my previous article Private Money Lenders: Who They Are & How to Find Them. Now I want to provide more detailed and practical advice on how to find these investors.

Disclaimer: You need to follow SEC rules on raising private money from third party investors. I found a good Biggerpocket Article that address the legal issues  and provides tips on raising money from capital investors: How to Raise Money for your Real Estate Investment by Clint Coons, though more recently, there have been some changes following the Jobs Act Amendments to the Regulation D advertising rules. You can read more about those changes here: SEC Website

My Article Disclosure: There is no magic directory or website that will supply you with ready, willing and able capital investors.  Rather, raising money (like finding deals) is a blend of marketing and persistence.  This may change once the Jobs Act rules relating to Crowdfunding are released to the public and take effect (Check out this WSJ article for more information on that.) Until then I will show you an old school way.

Building Your List of Private Money Lenders

The first thing you need to do is to build a list of potential capital lending prospects investors. “Easier said than done,” you must be thinking. Yes this is difficult – but it is doable as I was able to do it so you can too (Trust me – I am not necessarily the sharpest knife in the drawer).  There are two ways to build this list in my experience:

A.) List Brokers:

A list broker acts as an agent for those who wish to conduct direct marketing campaigns via direct mail, email or telemarketing. List brokers provide lists that, minimally, contain a prospect's name and contact information. There are many list brokers out in cyberspace that you can find with a simple google search, such as Click2Mail.com. Here are the steps you need to take to build a list of “potential” capital investors:

  • Area: Decide which areas or cities that you want to target to compile a list of prospective capital investors. This can be done in a variety of ways. You can pick your entire state as you target area or the cities closet to your investment area.
  • Ankit Recommendation: You can utilize Census.gov, City-Data.com, or Bureau of Labor Statistics to do a quick search for the highest median household income towns relative to your state median income and pick those towns as your target areas.

  • Filter Criteria: Once you have identified the areas then comes the step of picking filter categories. The categories if picked correctly will allow you to a build list that has a higher propensity of being interested in lending money to local real estate investment projects. This step where list building becomes more an art than a science as the filter categories are large and varied so pick yours wisely. The best general advice that I can provide is “Be a Capital Investor” what I mean is think like a capital investor in terms of how much money would you want in your bank account before you started investing, what would be your interests i.e. cigars, wines, boats etc, would you be already investing in the stock market or other investment categories etc. This though exercise will help you come up good filter criteria so that you list would be more relevant and targeted.

    Category Recommendation:

    • Median Household Income (Greater than $90,000)
    • Invested in Stocks or other investment products (Yes)
    • Owns a Personal Residence (Yes)
    • Has Individual Retirement Account   (Yes)
    • Responsiveness to Direct Mail (Medium to high)

B.) County Records:

 Searching county records is like being a Real Estate Detective as you are trying to find a needle in a hay stack; the needle being “Prospective” capital investors. What are you looking for? That is the first question I had when I started doing this. There are two subsequent question that arise from overall question of what are you looking for?

  • What document should you be researching? Some investors think it’s the deed – rather, you will have to go through Mortgage Document records. You can do this research either from your home computer if your county is online or physically at the county recorders office. In the State of New Jersey, there is a website that lists which counties are online and which are not.
  • What should you be searching for within the Mortgage document? You are looking for the Grantee line (Mortgage Provider.) Your mission (if you choose to accept it) is to find Grantee lines that either have a personal name or a corporate entity name that is not a bank (i.e. you don’t want Wells Fargo, Bank of America, Chase, Valley National etc. or a national servicing company like Ocwen, Saxons etc.) You simply want a no-name LLC like 32 Main St LLC. The reason you want it to be either a personal name or a no-name LLC is because these are private lending individuals/ firms that have already lent money in your state or investment area (Ankit Time Saving Tip: If you want capital investors that already know your investment area then search for mortgage records that is within your investment area as this makes it a easier to find capital investors that are more familiar with your area and there is no less hurdle to have them invest into your deal) and they will be more to lend more money in that area if you have a good deal.
  • The county record way of list building can be both time consuming and frustrating as it takes a long time to search through the records and you run into more dead ends than private lender records. However, this activity provides  the best yielding list of “prospective” capital investors in my personal opinion as these lenders have already done two things: (1) Lent money on local real estate investments and (2) lent money within your state or investment area.

    Bonus Offer: I know that searching county records is frustrating so over my last 5 years as a real estate investment director I have found a way to cut down your search time at the county records so that you can more quickly find potential capital investors. It is not perfect but its a  decent shortcut. However I cannot just give away that shortcut without something back from the readers. To get this bonus I simply want you to read and share this article with your friends, family and other fellow investors and once this article either reaches 100 tweets or 25 comments then I will share the shortcut below! 😉

Moving On…

The next step of this system is reaching this list of “potential” & “prospective” capital investors that you have complied followed by presenting to them to establish credibility. How to approach them and how to be successfully across the following two steps we will cover next time. (Cliff Hanger Ending…..I know I hate those as well but I want you to tune in next week same Bat-time, same Bat-channel)

Until then, I would love to hear your ideas on compiling a list of potential capital investors along with any questions that you may have; Leave your thoughts in the comments section below.

Happy Investing
Photo: Phphoto2010

Ankit Duggal(G+) is the Investment Director of a New Jersey Income Operating & Consulting Company . Ankit is a seasoned value investor who enjoys achieving a zen through surfing, hot yoga, and snowboarding.

    Randy Phillips Wholesaler from Clovis, California
    Replied over 3 years ago
    Very interesting and informative, I make my money now wholesaling Real Estate to the rehabbers and it has been very profitable. The thought of getting in over my head with a rehab project seams scary, and I did one that was a nightmare. I spent 3 months rehabbing a gutted duplex and didn’t make any money, luckily didn’t lose any cept my time. When I can make 15 Grand fast by doing an assignment contract and letting the local rehabbers deal with the risk and problems I happily do it. While they are taking 3-6 months to make 40 grand I can wholesale several properties and have no worries. If I decide to torture myself with stress and risk and dealing with all the BS, I’ll try it again. Rando
    Anson Young Flipper/Rehabber from Denver, CO
    Replied over 3 years ago
    I was happily cranking along wholesaling until the market got REALLY tight…. I then found I was sitting on more money than I could get on each deal if I just flipped it. Now I’m 95% flipping and 5% wholesaling.
    Ekyn Chen from Union City, California
    Replied over 2 years ago
    How do you get wholesale deals? I know someone get there wholesale deals by doing direct mail, posting signs on the streets. Does that really work??
    Anson Young Flipper/Rehabber from Denver, CO
    Replied about 2 years ago
    Sorry for the late reply! It really does work! All of those ways are how I find them! Check out https://www.biggerpockets.com/greatdeals for more info
    Jamane Y. from Greensboro, North Carolina
    Replied over 3 years ago
    thank you this was very informative.
    Anson Young Flipper/Rehabber from Denver, CO
    Replied over 3 years ago
    You are most welcome!
    Paul Winka
    Replied over 3 years ago
    Hi Anson, which social media platforms do you find bring you the most success with getting the word out about your projects?
    Anson Young Flipper/Rehabber from Denver, CO
    Replied over 3 years ago
    LinkedIn – have a cool story about how a hoarding video brought me 3 clients (around $50k) Facebook – A given… Instagram – everytime I post an update with the right hashtags, I get 3-5 new followers.
    Paul Winka
    Replied over 3 years ago
    How about your next blog post tells about that hoarding video? I am interested and it would be a bit different than the typical BP blog post.
    Anson Young Flipper/Rehabber from Denver, CO
    Replied about 2 years ago
    I’ll see what I can do!
    Anson Young Flipper/Rehabber from Denver, CO
    Replied about 2 years ago
    I’ll see what I can do!
    margaret smith
    Replied over 3 years ago
    Hi Anson- Great resources here- thank you! I am a private (hard) money lender, and 2 years ago went out on a limb to fund new clients with 100% of the purchase, most of the closing, and all of the rehab costs. This might be called an Equity Participation loan. I provide the money- they do the rest. It has worked really well. As a lender, this is very risky, so that is why we do a 50/50 split of the profit at the end. It is up to the rehabber to present a great case for why this will work. After several successful projects, I am now willing to pay my rehabber a small fee up front (out of closing cash) as a wholesale fee to themselves, and take a little bit less of the profit on the back end. I don’t require any interim payments on a 6 month loan, though I do charge a couple of points, in cash from the rehabber, to extend the loan another 6 months. This structure has worked well for both parties. Have to choose your partners carefully, though! How do I get hooked up with rehabber clients? Different real estate clubs in my area- networking, like you say. All I have to do is stand up and announce that I am a lender. People approach me. So nice! Now I am trying to find ways to go in on larger deals with other lenders. If anyone out there has a secure, simple way not to require a first, and a second, lender- Please let us all know! No one ever should volunteer for a second place lien!
    Farley Youman
    Replied 5 months ago
    Thank you Margaret. I have completed some rehab projects and have made a profit every time. Instead of a 50/50 split of the profit, I only give myself 40% of the profit and the person loaning gets 60% of the profit. Prior to getting into the business, I read 60 books and attended 10 conventions on how to do real estate investing. I can work anywhere in the Atlanta area, but I prefer the Mableton, Austell, Powder Springs, and Smyrna area. Except for maybe Smyrna, we can still get great prices in an area that is changing for the better and is not too far from downtown Atlanta. Farley Youman
    Donese
    Replied over 2 years ago
    Can you share your contact information? I would like to contact you around how I would like to use this type of funding for mortgage note purchases. Reply Report comment
    Todd Goedeke from Sheboygan, Wisconsin
    Replied over 2 years ago
    How would you like to have available a world of additional lenders to co-invest in bigger deals? I work with Solo 401k and SDIRA owners who wish to loan rather than own properties. Performing due diligence on real estate projects is not on their resume. I have a website that helps pick out for a business owner or SDIRA prospective owner the right Provider of Solo 401ks and SDIRAs that allows in their plan : real estate, loans on real estate, private loans, loans to businesses, farm loans, precious metals,etc. How do I find other competent lenders such as yourself to sift thru rehabbers dreams of vast flipping profits on properties before bringing the deal to me and my large inventory of lenders of cash ? What is best way to contact you?
    juan simental
    Replied almost 2 years ago
    hello Margaret smith what areas do you lend ??? I am in texas
    Ekyn Chen from Union City, California
    Replied almost 2 years ago
    Thank you! bought the book
    Gloria Dulan-Wilson from Philadelphia, Pennsylvania
    Replied almost 3 years ago
    Margaret – I found your information very helpful – clarified a lot of things – but I’m not a “flipper” – I am more into what Brandon TURNER OF BIGGER POCKETS calls “BRRRR” – which stands for “Buy, Rehab, Rent, Refi, Repeat” – are you private lenders that are interested in those kinds of deals? I’m just getting started in this as an investor – my background was formerly that of an executive director of a non-profit affordable housing program in Brooklyn, NY where we acquired the property – total gut jobs – renovated them, and then marketed them to qualified low and moderate income families, whose funds came via HUD, Fannie Mae, Freddie Mac, NY Housing – etc. But I am now venturing into this as an investor, because there are some great opportunities out there for those kinds of deals. Are you also open to blanket loans or just one deal at a time? I noticed that you are very active in this regard – and wonder whether or not you would also be interested in the BRRRR Concept? I am mostly dealing with cash flowing Duplexes, Triplexes and Quadplexes. Would love to be in communication with you. Thanks for your response or advice.
    Gordon D. Residential Real Estate Broker from Stroudsburg, Pennsylvania
    Replied over 1 year ago
    Margaret~ Are you interested in lending in NE PA/Pocono area? I sent you a message with some details but it didn’t go through.
    Donese
    Replied over 2 years ago
    Can you share your contact information? I would like to contact you around how I would like to use this type of funding for mortgage note purchases.
    Ekyn Chen from Union City, California
    Replied over 2 years ago
    Margaret, I’m going flips, I’m interested in learning more about what you do on the 100% funding and 50/50 split. so with the 50/50 split did you charge interest and points?
    Nesta Dawkins from Lawrenceville, GA
    Replied over 1 year ago
    Would Love to connect with you on a flip or two in Atlanta Georgia sometime.
    Kim Nauling from Topeka, KS
    Replied over 3 years ago
    Hello, I am (of course) interested in this type of deal. I have been a wholesaler, but would like to flip a property my I currently have under contract.
    Greg Goldsmith Professional from Las Vegas, Nevada
    Replied over 3 years ago
    Hi Margaret, good post, thanks. I am interested in learning more about what you are doing, please message me at: gdgold2010 (at) gmail dot com, thanks!
    BB Liu from New York City, NY
    Replied over 2 years ago
    Hi, I wanted to address Margaret’s comment “Now I am trying to find ways to go in on larger deals with other lenders. If anyone out there has a secure, simple way not to require a first, and a second, lender- Please let us all know! No one ever should volunteer for a second place lien!” Would the following scenario work: Lender A and Lender B form Lending LLC. Lender A contributes 60 and Lender B contributes 40 into the LLC. So, the LLC has two members and 100 in assets. Lending LLC lends 100 to Rehabber. So, Lending LLC is in first lien position. There is no second lien, Rehabber defaults on the loan and Lending LLC brings in action in court to foreclose on the property. Lending LLC wins the court case, then sells the property for 50. So, Lending LLC has recouped 50% of its investment. Lender A and Lender B split the proceeds in the proportion in which they had originally contributed – so Lender A gets back 40 and Lender B gets back 10. Notice lender B is NOT in “second lien” position despite having contributed less than Lender A. Please tell me if I am misunderstanding something. I really appreciate this. Thank you!
    Reginald Washington
    Replied about 1 year ago
    You seem like a creative and savvy investor i am in Chicago and i a Whosaler/Flipper and soon to be Vlogger can we talk I am looking for anything that can take my in business to another level.
    Anson Young Flipper/Rehabber from Denver, CO
    Replied over 3 years ago
    Exactly, right after this post went live, I was at a networking meetup where everyone goes around and says what they do. All of the lenders got mobbed at the end! Its easy to be a lender, harder to be a borrower who is looking for certain terms, of course!!
    Michael McKenzie Lender from Cary, NC
    Replied over 2 years ago
    Let’s connect.
    Kanita Memic
    Replied about 1 year ago
    Hello Margaret, can you please contact me? Thank you.
    Bruce Silverman Lender from Atlanta, Georgia
    Replied over 3 years ago
    Getting 100% financing is great if you can get it. As mentioned by other people, typically folks that lend at 100% want 50% of the profit. If you have 20% of your own money, we’ll fund your deal and you keep all the profit…
    margaret smith
    Replied over 3 years ago
    Bruce- Do you fund nationally, or only in your own state? As a private lender, I only feel secure lending on collateral I can see and touch within an hour of my own home. Each state (even county!) has it’s own procedures and laws, and so the lending docs must be drawn up accordingly, right? How do you deal with that– a lawyer/title agent in every state? Also, how can you feel secure with property that is located a very long way from you? Who inspects for draws? How do you double check comps? How do you get to know your borrowers? The neighborhoods? How do you communicate effectively? What about the biggest issue for lenders– Ie, that of trust? Just wondering if you have any tidbits for us all, as several people are reaching out to me from other states… Reply Report comment
    margaret smith
    Replied over 3 years ago
    Bruce- Do you fund nationally, or only in your own state? As a private lender, I only feel secure lending on collateral I can see and touch within an hour of my own home. Each state (even county!) has it’s own procedures and laws, and so the lending docs must be drawn up accordingly, right? How do you deal with that– a lawyer/title agent in every state? Also, how can you feel secure with property that is located a very long way from you? Who inspects for draws? How do you double check comps? How do you get to know your borrowers? The neighborhoods? How do you communicate effectively? What about the biggest issue for lenders– Ie, that of trust? Just wondering if you have any tidbits for us all, as several people are reaching out to me from other states…
    Todd Goedeke from Sheboygan, Wisconsin
    Replied over 2 years ago
    Margaret, Very good questions. How do I get in touch with you?
    Nesta Dawkins from Lawrenceville, GA
    Replied over 1 year ago
    That’s great lets connect.
    Anthony Stephenson Investor from Murfreesboro, Tennessee
    Replied over 3 years ago
    Bruce, do you fund 80% of the puchase only or do you fund 80% of the entire deal (purchase + rehab)? What are your terms? Just FYI, I’ve done several deals where the private individual funds 100% of everything and we split 60/40 or even 70/30 in some cases. I’ve done hard money as well. I don’t like giving up money but a % of something is better than a % of nothing..
    Anson Young Flipper/Rehabber from Denver, CO
    Replied over 3 years ago
    I market or network until I can find the terms that I want. I wont do 50/50 splits, or more than 1 point, or sometimes I wont even do monthly payments. Sure, I have to weed out 10 to find one on my terms, but thats what it takes!
    Darryl Bass Wholesaler from Maywood, IL
    Replied 10 months ago
    Can you send me your contact info?
    Jason T Rabon
    Replied over 1 year ago
    Hi Bruce, are you still lending?
    Brandon Turner Investor from Maui, HI
    Replied over 3 years ago
    Best post on private money I’ve ever read, hands down. Nice work, sir.
    Anson Young Flipper/Rehabber from Denver, CO
    Replied over 3 years ago
    Thats a great complement, sir!
    Todd Goedeke from Sheboygan, Wisconsin
    Replied over 2 years ago
    Anson, How do I get in contact with you? Are you looking for more lenders?
    Anson Young Flipper/Rehabber from Denver, CO
    Replied over 2 years ago
    Todd, you can send me a message on biggerpockets
    Ben Ruskin
    Replied over 3 years ago
    The interview you heard about the retiring police officer gathering his colleagues and convincing them to invest in him was BP podcast episode 3
    Anson Young Flipper/Rehabber from Denver, CO
    Replied about 3 years ago
    You are correct, I then sat on a speaking panel with Brian Burke a week later. Need a memory check!!!
    Peter S. Rental Property Investor from Denver, CO
    Replied about 3 years ago
    Hey Anson, You mentioned that you often work with multiple smaller lenders to fund your deals. How does that profit sharing typically work out in that situation? I’ve built up a small amount of money to start moonlighting in REI but wonder if doing something like this would allow me to build up more capital for buy and hold.
    Paul Eller
    Replied about 2 years ago
    Any luck finding investors? I need wrk on a token house. Paul Reply Report comment
    Paul Eller
    Replied about 2 years ago
    Any luck finding investors? I need wrk on a token house. Paul
    margaret smith
    Replied about 3 years ago
    Anson, I think what Peter S. means is that he wonders how you structure your deals with multiple investors on a deal. What are the lending docs? What portions do your record? How to you steer clear of the SEC if your investors are not accredited? What about investors from different states? Do you use an attorney? What does it cost, per deal, to set up the lending package and close? How are profits divvied up? I would love to know that too! Thanks, in advance….
    Anson Young Flipper/Rehabber from Denver, CO
    Replied about 3 years ago
    Margaret, the smaller investors are usually utilized for 2nd position rehab monies. So it looks very much like the 1st position, only in 2nd. So deed of trust, promissory note are both recorded at county. I’m not syndicating deals (yet?), so no expertise on that subject!
    Jim Galart
    Replied about 3 years ago
    Anson, This was the best information on private money I have read. I am taking my first steps in starting to house flip, however I did not know how to secure 100% purchase and rehab financing. After reading some of the posts a lot of my questions were answered. Thanks Jim Galart Lubbock, Texas area
    Anson Young Flipper/Rehabber from Denver, CO
    Replied about 3 years ago
    Thank you Jim! I appreciate you taking the time to read and comment! Good luck out there!
    Amanda Flowers Investor from York, South Carolina
    Replied about 3 years ago
    Thank you for the information! So you think after 2 years experience with 9 houses under our belt can we find investors who would be willing to take 8-10% of cash invested (is that annualized?) or are we set at 50/50 split of profits until we get more experience? Or can we start asking for more money in a 65/35 split? We have been giving 50/50 split, working with friends and family but it seems like we’re giving away so much for the amount of work at goes into these projects. Also is there an example on here of power points and track record sheets that you give potential investors? Or should I write up a full business plan? Thanks!
    Anson Young Flipper/Rehabber from Denver, CO
    Replied about 3 years ago
    Hard to say, since each and every private money lender is different. I would say 9 houses is plenty of track record to ask for straight interest rate vs. a split. Having your track record broken down in your business plan couldnt hurt at all, that way the lender can see that you know your numbers inside and out on the 9 you have done, and will feel more comfortable working with you. Good luck out there!!
    Brandon Sturgill Real Estate Broker from Columbus, OH
    Replied about 3 years ago
    Good article, Anson. Thanks for sharing. The one thing I am finding lacking with articles about raising private money are the actual mechanics of the deal…for example, do you start an LLC and form a JV for each deal, and who pays for the associated costs (including drafting the legal documents like the note)…and how do you handle closing?…do you offer interest only payments during the project?…and how do you structure the note?… I have a million other questions, but the actual steps you use when completing a deal would be tremendously more helpful than the cursory overview you have provided here. Cheers.
    Anson Young Flipper/Rehabber from Denver, CO
    Replied about 3 years ago
    There are a million ways to structure it, and it will depend on what you and your lender want to do. Mine, we do a standard deed of trust and promissory note, the payment is negotiable, the rate is negotiable, the profit split is negotiable, the points are negotiable. So therefore, the reason there isnt a play by play of how these are structures, is because everyone does it differently!
    margaret smith
    Replied about 3 years ago
    Hi Brandon- You are so right, the devil is in the details, and it is rare that anyone give you a peek at their lending package. I would suggest you spend some time with both lenders and borrowers in your local real estate clubs (you may have several in your general vicinity, and it is good to join ALL of them, esp while you are networking to find out who is who and what they are doing!) Ask each of them at some point (very nicely, of course!) whether they might be able to pass you a redacted version of a deal they recently did involving a private lender. As a lender, I use a mortgage and note to secure my first position in the public record, and if there is a profit sharing component, I also have a Participation Loan Agreement, or something of that nature, that takes precedence. I don’t use an LLC. I will say that a lender should have their own docs, make the changes that pertain to your individual deal, and have you review it for negotiation. It is normally the lender’s responsibility to hire an attorney, and come up with a good deal structure and docs that go with it. However, if you are dealing with a newbie lender, you two might want to sculpt the deal together and share in the doc creation and closing costs. If you are both working toward a deal that is fair and equitable to both sides, with good faith among all, you should have the foundation of a long term investment partnership. Good luck!
    Brandon Sturgill Real Estate Broker from Columbus, OH
    Replied about 3 years ago
    Thanks for the follow-up, Anson!
    Ray Morris Jr. from Jacksonville, Florida
    Replied almost 3 years ago
    I am a buy and hold investor. I am also a healthcare professional and I’m having a hard time educating some of high net worth friends. I will deifinitely try a few of the strategies and also develop a short presntation in the hopes of getting long-term private funding.
    Anson Young Flipper/Rehabber from Denver, CO
    Replied over 2 years ago
    Awesome Ray! Thats a great way to do it, educate then present opportunities!
    Gloria Dulan-Wilson from Philadelphia, Pennsylvania
    Replied almost 3 years ago
    Hi Anson – I found your information very helpful – clarified a lot of things – but I’m not a “flipper” – I am more into what Brandon calls BRRRR – buy, rehab, rent, defy repeat – are there private lenders that are interested in those kinds of deals? I’m just getting started in this as an investor – but there are some great opportunities out there for those kinds of deals; and are they open to blanket loans or just one deal at a time? I noticed that Margaret is very active in this regard – and wonder whether or not she would also be interested in the BRRRR Concept?
    Anson Young Flipper/Rehabber from Denver, CO
    Replied over 2 years ago
    There are for sure. A BRRRR looks like the front stages of a flip, except instead of selling to an end buyer, you refi out. There are even lenders who do a hard money loan up front, then the refi 6 months later for this type of deal. Its all about finding the right person, who knows their money will be tied up for 6 months until you can get the conventional refi in place and buy out the private money loan!
    Gloria Dulan-Wilson from Philadelphia, Pennsylvania
    Replied almost 3 years ago
    Just noticed an error in my previous commentary – and I wanted to correct it: BRRRR stands for Buy, Rehab, Rent, Refi, Repeat – for some reason the auto correct saw fit to change it from “refi” to “defy” – I think the concept of attending the meetings is a good one – but if you’re just starting out, what’s the best way of approaching the possible lenders. Also, I’m assuming that you are not dealing with realtors per se. My biggest challenge in finding properties is going through realtors who want you to sign with them exclusively and who want to verify your finances before the finances have been obtained – have you had this as an issue? or are you now able to source your own properties without having to deal with the MLS or aggressive realtors who don’t understand investing? I know Anson’s original positing occurred in August – and I’m just reading it in January, but if you or Margaret are still connected with this, I would really appreciate hearing from you on this. I am in the Philadelphia, PA area – a far cry from Colorado – but I see a great deal of applicability in what you’ve shared – Thank you again.
    Anson Young Flipper/Rehabber from Denver, CO
    Replied over 2 years ago
    Gloria, For the last 3 or so years, all of my deals have come from off market sources. MLS is WAY too competitive in my market, and even with the BEST aggressive agents, I doubt I could do a deal a quarter going that direction. Its a hard piece to learn and implement, off market deal sourcing. Especially for someone who only wants to buy 1-4 properties a year, where I’m trying to buy that many a month. Not impossible, though. When approaching lenders, they are either sold on you, the opportunity or your track record. Or a combination of those things. Going in with zero track record, you better have a winning personality and some good opportunities that a lender would jump at. Its the nature of the private money game, track record usually wins, but isnt the end all-be all.
    Atchuta neelam
    Replied almost 3 years ago
    Hi Anson, Great post, Useful for all real estate investors. One search county clerk mortgage & deeds records to find private lenders.
    Anson Young Flipper/Rehabber from Denver, CO
    Replied over 2 years ago
    Yes! Exactly! Most states have lenders listed as public record. Some closed record states dont, and that makes things a bit more difficult!
    Anson Young Flipper/Rehabber from Denver, CO
    Replied over 2 years ago
    Yes! Exactly! Most states have lenders listed as public record. Some closed record states dont, and that makes things a bit more difficult!
    Atchuta neelam
    Replied almost 3 years ago
    Hi Anson, Great post, Useful for all real estate investors. One search county clerk mortgage & deeds records to find private lenders.
    Kevin Sapp Lender from Cary, North Carolina
    Replied almost 3 years ago
    Great post. Don’t recall seeing it, so add your local real estate investment group. As a lender, I give out about 10 cards each time I attend and may receive one followup. Ask at the REIA meeting who the lenders are, talk to them and follow up. I am much more likely to remember the prospective borrower if they email the next day or that night than three weeks later. Show drive, passion and dedication. I’ll provide a what not to do also. Don’t send a generic email with anonymous recipient list to a lender that your asking for possibly hundreds of thousands of dollars. Take the time and craft the letter. Kevin
    Anson Young Flipper/Rehabber from Denver, CO
    Replied over 2 years ago
    Absolutely on all points. I havnt had luck with the REIA approach, more luck finding the guys with $500k-2mm to lend who are a bit off the grid. Cold call and mailing them works, if we can work it out, its perfect for us since they usually arent lending to 10 other investors…
    Diane Williams
    Replied about 1 year ago
    Very interesting. These are the lenders I am interested in conducting lending with. However, if there off the grid how would I find them to make a direct connection? Please explain the process of finding these higher end lenders? Thanks, Diane
    Martyn Lockwood Investor from Sydney, New South Wales
    Replied almost 3 years ago
    Great post Anson…thanks for sharing. For any of the lenders reading…how do you lend for buy and hold investors? I get that an agreed split can be worked out for a property that is being flipped, but what about buy and hold…do you just work out payment terms? Interested in your input/thoughts. Martyn
    Kevin Sapp Lender from Cary, North Carolina
    Replied almost 3 years ago
    Martyn, I generally don’t lend for buy and hold. The other larger, private lenders in my area are also short term lenders. So far I have not been approached with a long term or equity deal that entices. Kevin
    Martyn Lockwood Investor from Sydney, New South Wales
    Replied almost 3 years ago
    Thanks for the (very quick) reply Kevin. Martyn.
    Alex Sanfilippo from Jacksonville, Florida
    Replied almost 3 years ago
    Great post! Thank you for sharing!
    JL Hut Investor from Greenville, Michigan
    Replied over 2 years ago
    Good post, like it.
    Joe Schmitt Specialist from Saint Paul, MN
    Replied over 2 years ago
    This is one of the most helpful articles I’ve read on the BP blog. Thank you Anson. I am a new investor looking for my first multi-family deal. I some money stashed away, but certainly not enough for a down payment and rehab costs on a du/tri/fourplex. And since I’ve not done a deal yet, I have no track record to show potential partners/investors. As such, it seems my only real option is to get started with hard money. Any thoughts?
    Anson Young Flipper/Rehabber from Denver, CO
    Replied over 2 years ago
    Hard money, or family private money seems like a good option. Also, maybe a partnership where you give up more of the pie but get in with less money down or in the deal.
    Dillon Kenniston from Doylestown, PA
    Replied over 2 years ago
    Hey Anson, thanks for this! Follow-up question coming from a total newbie. You write: “Let’s sit Uncle Joe down with a full on business plan, power point presentation, and pro forma package for him to pour over. This can be a good way to get taken seriously by a contact of yours who is a bit more formal and wants to be sold on you and your company. Why should they invest with you? What are some deals you have done and what is the return you gave that lender? What are some deals you are looking at right now if they want to get in with your company today?” For folks who wouldn’t even know where to begin with putting together this kind of presentation, what resources could you recommend? Do you have templates, models or spreadsheets you work off of? Checklists of information you typically include? You throw some hints at info you present with the questions at the end of the quote, but what specifically do you focus on (beyond presumably IRR, COC) when it comes time for the hard sell? Thanks!
    Anson Young Flipper/Rehabber from Denver, CO
    Replied over 2 years ago
    Resources include any kind of investment calculator, and prettying up the output with nice infographics and a good presentation. I’ll calculate the monthly and annual return for a past project, how it turned out and how much the lender made. I’ll pull the numbers for a property I’m looking at in order to show them you have something they could invest in today, and the possible numbers. I usually just show them the numbers, APR %, terms etc. Nothing too fancy, there are usually 2-3 numbers and a handful of terms. Might be 12% APR 1 Point 6 month term No pre-payment penalties Payments and points rolled into end of the loan Rehab funds in 2 draws Most people should understand what that means, even uncle Joe.
    Danny Randazzo Apartment Syndicator from Charleston, SC
    Replied over 2 years ago
    Great post Anson. There were a lot of good golden nuggets of information.
    Andrew Syrios Residential Real Estate Investor from Kansas City, Missouri
    Replied over 2 years ago
    Great article! This is definitely a skill people need to learn if they want to do well at real estate.
    Howard Greisman Investor from Jacksonville, Florida
    Replied over 2 years ago
    Hi Anson, great post. Very informative as I’m currently looking for private lenders for my business in Jacksonville, FL. Thank you.
    Rachel Luoto Rental Property Investor from Bremerton, WA
    Replied over 2 years ago
    Hi Anson, thank you for the post! Might I suggest a follow up topic? How to structure these deals once you have the money! I find networking to raise money natural – but there’s little detailed information on how to move from the mere pledge to invest, to actually having the partnership ready to buy!
    Anson Young Flipper/Rehabber from Denver, CO
    Replied over 2 years ago
    Great suggestion! I’ll see what I can do!
    Warren
    Replied over 2 years ago
    Hello Hanson. Great Article. I am an OPM advocate and would like to know if you have any lenders who will consider deals in Atlanta, Georgia Baton-rouge, Louisiana. I also have in qualified in-buyers with POF funds.
    Taka Sande Investor from Pretoria, Gauteng
    Replied over 2 years ago
    This is one of the most helpful posts on BP. It is full of real stuff. Thank you Anson. I also have a few good deals here in South Africa, and I am looking for funding. This post really gave me some insights.
    Alejandro Riera Contractor from DFW, TX
    Replied over 2 years ago
    Hi all. Starting with the original post by Anson, all the comments have complemented an excellent discussion for this topic. Different angles of the same bussiness have enriched our knowledge and have opened our eyes and broaden our view. Thank you all for your insights, particularly to Bigger Pockets for gathering us in this forum.
    Anson Young Flipper/Rehabber from Denver, CO
    Replied over 2 years ago
    That is the BEST part about BP! Thanks for reading Alejandro!
    Miguel Perez Wholesaler from Morrisville, North Carolina
    Replied over 2 years ago
    Good info thanks
    Jacinta Gomes Flipper from Haymarket, Virginia
    Replied over 2 years ago
    I am interested in getting a loan for working capital for a property.
    Mike
    Replied about 2 years ago
    Finding a hard money lender or larger investor can be very difficult. I spent over 6 months running from one bank to another, none could help me. I was exhausted and before a local loan officer referred me to a hard lender; he only does this when the deal is solid. In my case, at 28, two yrs work experience, I decided I could make it in real estate development than doing my professional job; felt I was doing alot and not rewarding enough, though pay was 6-figure. I had solid development plan, superb resume, excellent credit and recent closed development deal. I’m a structural engineer and also an architect. This played in my favor as I was able to convince investor that I’ll be designing these commercial structures myself and supervise them from start to completion professionally, though with a general contractor builder on ground. My first and recent development also played a key role, where I designed and built a half a million dollar mountain home that sold few days in construction; the design was custom and attracted lots of interest from millionaires looking for buy a mountain vacation home. All of these, coupled with my local bank officer and a broker working with my development group, made me seem very legit despite uncapitalized. Long story short, two hard lenders were prepared to fund my project for 2million commercial retail strip center including land. The project will worth 5 million plus upon completion. The project was completed in 11 months, leased out 100% in month 13 and with cap of 6% or excess of 300,000 a yr in NOI. It sold for 5.5million in month 20. Hard lender was paid 25% ROI…500,000, so total payment to hard lender plus return was 2.5million in less than 20 months. He was happy and wanted more. I didn’t see any reason to use him further since I’m now very capitalized and a big player in the game as banks now loan me directly without hesitation. Though I do refer solid developers to him on condition I’ll get 5%
    Anson Young Flipper/Rehabber from Denver, CO
    Replied about 2 years ago
    GREAT post!
    Robert Hall
    Replied about 2 years ago
    My partner and I are looking to get into the property Management business, and are looking for Lenders/Investors. We realize that we may have to start with flipping houses to eventually make enough money to actually buy/build rental duplexes, or small multi-family units, or find the right Lenders/Investor to do so. I have over 20 years of Maintenance experience in the multi-family industry and almost 5 years of Facilities Management experience. My partner has degrees in Business Management and I.O. Psychology. We would appreciate any information or advise about getting in touch with any lenders/Investors, that would like to invest in our new company.
    Robert Hall
    Replied about 2 years ago
    My partner and I are looking to get into the property Management business, and are looking for Lenders/Investors. We realize that we may have to start with flipping houses to eventually make enough money to actually buy/build rental duplexes, or small multi-family units, or find the right Lenders/Investor to do so. I have over 20 years of Maintenance experience in the multi-family industry and almost 5 years of Facilities Management experience. My partner has degrees in Business Management and I.O. Psychology. We would appreciate any information or advise about getting in touch with any lenders/Investors, that would like to invest in our new company.
    Dan barnes
    Replied about 2 years ago
    I’m looking for a 100% purchase on a home at 65% Ltv with bad credit for a 6% 30 year fixed $175,000 loan. Home value $270,000. 916-529-5243
    Joshua Gallagher
    Replied almost 2 years ago
    Thank you Anson for the article. I currently gaining knowledge in the house flipping business, and doing the research and this article really helps. I currently don’t have any of my own money and find that it is hard to get started without that, but I do have a father and uncle who are general contractors. Both have been in the business of rehabbing and building homes for over 20 years Both are great resources and when I do find a lender/ or come up with own money would be remodeling the properties. Any other advice you have would be appreciated. Thanks again for the article.
    Tom Roisum
    Replied over 1 year ago
    Thanks for this great article Anson! Very informative. I am an investor in MO and currently looking for partners to fund our Real Estate deals. Looking forward to more articles like this!
    Howard Greisman Investor from Jacksonville, Florida
    Replied over 1 year ago
    Hi Margaret, Do you lend in Jacksonville, FL? It’s a great market here. I’m working on a deal and it would be great if we could do some deals together. I don’t think I’m allowed to put my email address in this message, so please pm me and I will send contact Info. Thank You.
    Rome Wells from Stamford, CT
    Replied over 1 year ago
    Indeed article is on point…. I am 3 months in my REI journey… here is what I think….. Network with other investors… who are not just lenders……. but partners… Structuring deal can be very difficult to understand… without a concrete example… Too many variables…
    Gordon D. Residential Real Estate Broker from Stroudsburg, Pennsylvania
    Replied over 1 year ago
    Thanks for this very informative and motivating article, Anson. I appreciate you sharing your hard earned knowledge and experience.
    Anthony Applewhite from Nesbit, Mississippi
    Replied over 1 year ago
    Thanks for the information. It was very informative. I am a new investor in the Memphis, TN area and I would like to get connected with some lenders who are willing to loan 0n deals with new investors in my area. Thanks and hope to be doing business with you.
    Patrick
    Replied over 1 year ago
    Anson, Nice article. Very helpful for rehabbers and newbies. Although we are in primarily in the commercial arena I found especially helpful were the comments you were able to elicit from your readers. The one area we found elusive when starting out was the mechanics of the terms expected by the investors or those that could be dictated by the developer/rehabber e.g. ROI, preferred returns, time to payment, lien position, amount of up front financing, legal entities, investors vs. VC firms, etc. It took a while and multiple discussions with individuals from different disciplines.
    Patrick
    Replied over 1 year ago
    Anson, Nice article. Very helpful for rehabbers and newbies. Although we are in primarily in the commercial arena I found especially helpful were the comments you were able to elicit from your readers. The one area we found elusive when starting out was the mechanics of the terms expected by the investors or those that could be dictated by the developer/rehabber e.g. ROI, preferred returns, time to payment, lien position, amount of up front financing, legal entities, investors vs. VC firms, etc. It took a while and multiple discussions with individuals from different disciplines.
    Patrick
    Replied over 1 year ago
    Anson, Nice article. Very helpful for rehabbers and newbies. Although we are in primarily in the commercial arena I found especially helpful were the comments you were able to elicit from your readers. The one area we found elusive when starting out was the mechanics of the terms expected by the investors or those that could be dictated by the developer/rehabber e.g. ROI, preferred returns, time to payment, lien position, amount of up front financing, legal entities, investors vs. VC firms, etc. It took a while and multiple discussions with individuals from different disciplines. Reply Report comment
    Patrick
    Replied over 1 year ago
    Anson, Nice article. Very helpful for rehabbers and newbies. Although we are in primarily in the commercial arena I found especially helpful were the comments you were able to elicit from your readers. The one area we found elusive when starting out was the mechanics of the terms expected by the investors or those that could be dictated by the developer/rehabber e.g. ROI, preferred returns, time to payment, lien position, amount of up front financing, legal entities, investors vs. VC firms, etc. It took a while and multiple discussions with individuals from different disciplines.
    Shawn C. Investor from Cedar Park, TX
    Replied about 1 year ago
    Thank you so much for posting this article. I have a couple of small private money lenders that I can use from time to time but nothing like other investors in my area. Your article gave me some great ideas and the confidence to try those ideas out that you wrote about in your article.
    Simcha Davidman Rental Property Investor from Jerusalem, Israel
    Replied about 1 year ago
    I think the story about a retiring cop is the one and only David Greene, but I’m not certain. I also did not read all of the comments, because there are a lot. Also, to how high an amount do you think it’s feasible/doable to raise private money. I’m looking into low 7 figure deals – is it realistic to borrow all of that from a couple of lenders? Thanks.
    Victor Kelvin
    Replied 9 months ago
    We ran low on funding but we got help from the grant of $300,000 we received from lutherangrants.com