Private Lenders…Where are Your Borrowers? Tips for Finding Qualified Borrowers

by |

How do you find people to lend to as a private lender?

TRUE STORY:  I was golfing with a friend of mine, and we were talking about the federal reserve and how banks make money.  As we were walking up a steep grade to the picturesque 7th hole (I always walk the course unless in a scramble or tournament) my friend said, “Lee, I would like to make money like you do, but how do you find the borrowers or notes to buy?”  If I had not heard that same question before, I would have been surprised. Sadly, this is not an isolated instance.  Several people have asked the same question.  In reality, quality borrowers and notes with good repayment capacities are abundant.  I use the terms ‘borrowers’ and ‘notes’ synonymously because where there is one, there is the other, and I use the same standards when evaluating both.

So, Where are the Borrowers?

Sure, you can walk into a room, hold up a bundle of cash, and say, “I have quick and easy money to lend for your business” and you will be very popular.  However, you are looking for quality borrowers.  Let me let you in on something, good borrowers are everywhere.  Matter of fact, you likely spoke to at least one or two of them TODAY!  Begin your borrower search from your existing personal and business relationships.  Those relationships will inevitably lead you to other networking relationships.


Networking should not be time consuming. By contacting your existing relationships, you will have a good start making private loans.  As money people find out about your private money lending business, you will have ample borrowers and even new sources of money wanting to do business with you.

Civic Organizations

The Rotary Club, Lions Club, or Kiwanis, to name a few, are well established civic organizations to help get your name and your private lending name known. In addition to being great community service organizations, they present an informal place to meet potential borrowers or potential financial partners.

Chamber of Commerce

Most chamber of commerce organizations offer networking opportunities through After Hours Meet and Greet events. In addition to a networking opportunity, these events provide opportunities to be kept abreast of the local business environment, meet potential financial partners or borrowers, and learn the most recent industry trends. Refreshments are usually served.

Furthermore, chamber of commerce organizations offer member referrals. A chamber receives numerous inquiries for local products and services. Most chambers exclusively refer these inquires to their existing members. Other chamber of commerce member benefits are sales and marketing opportunities, entrepreneurial seminars, and government advocacy.

REIA – Real Estate Investment Associations

Another great place to make contact with potential borrowers is the local Real Estate Investment Association, REIA. REIA clubs are associations of real estate investors and real estate professionals who gather weekly or monthly to exchange ideas, pass deals back and forth, and listen to expert speakers.  These clubs are patronized by motivated and positive people, who need private lenders to fund their real estate transactions.  Go to for updated information on forming a REIA and for detailed contact information on existing REIA clubs in your local area. When you attend these meetings, bring your business cards and business flyers.

The Take Away

When I began my sales career, right out of college, my boss said, “You’ve got to ask for the business.”  Even though my sales career was short lived because I don’t really like heavy sales, the advise still stands: you have got to ask your borrower if he/she needs a loan.   From that point, you are going to be a hot commodity.  Then, you need to determine who are the quality borrowers.  I will talk about that in a later post!

Happy Lending!
Photo: 401(K) 2013

About Author

Lee is a private lender with over 15 years of personal experience in the real estate industry. He teaches the everyday investor how to stop thinking like an investor and how to start thinking like a Banker by reviewing and creating cashflow-secured promissory notes that create double-digit returns.


  1. Qualified buyers are looking for private money as well! I found many so called private lenders but most are charging rates and terms similar to hard money. So far true hard money sea to come from friends, family or business aquantainces, at least in my case.

  2. I agree with Mark. Creating new relationships to grow my investor network has not been easy, and the “private lenders” are really just hard money lenders. The money I have raised from private lenders are people that know me and are really investing in me, not my project. Their investments are backed by real estate, but not one has looked at the numbers or projects! I have basically worked through my list of people that know me that have the means to invest. Since I have exhausted that list, it has been hard to expand my investor network. I am building those relationships, but it takes time.

  3. Thank you for the comments folks.

    It is true, ‘private’ and ‘hard’ money lenders can be one in the same. If you want to turn a ‘hard’ lender into a ‘private’ lender, I suggest taking some risk away. I would like to go into that now, but that would take another blog to do it justice. May I will dive into that topic later.

  4. Andy Teasley on

    For anyone who is looking for steady income I am looking for over $1.5 Million in replacement financing. I have varying size loans starting as low as $20,000 which I would like to replace with either less expensive or longer term loans.

    For example I have a 6 unit property in Southern California generating $3150 in gross rents which I need replacement financing of $105,000. This would be secured with a first trust deed and the property is currently paying on a 12% hard money loan. How much interest do you have to earn to tie up your money for the next 60 months?

    Andy Teasley

  5. I really like the example you shared in the beginning of the article about someone going into a room full of business people. I would seem that as far as borrowers are concerned, quality is more important than quantity. I think this information would be perfect for anyone looking for help regarding commercial lending. Thanks again!

Leave A Reply

Pair a profile with your post!

Create a Free Account


Log In Here