My secret sauce to get and keep private lenders

It’s a true blessing to have a real estate investing career that has lasted 12 years. I remember back in 2004 when I did my 1st wholesale deal, I figured I’d just wholesale for the rest of my life. I quickly learned wholesaling was a horrible job that kept me working over 40 hours a week and I had to be on my toes at all times to get deals. Well, a decade later, I still need to be on my toes as a buyer, but having a rental portfolio and some cash saved up to buy houses really contributes to me not having to work as hard. You see, if you only wholesale you never maximize or realize what the real estate game is truly about, and that’s making money without you having to be present. In this article I’m going to cover some truly secret moves that I’ve learned that really catapulted me to where I am today. Let me preface this entire article by saying I didn’t do any of this on my own. I happened to have gotten lucky back in 2010 and married the “right” woman and that’s been a major turning point for me. I don’t think I can even keep my own house together any more after meeting this lady because I didn’t know how bad my house was until she came into my life. So, in saying that, whether you’re married or not, you may have an advantage or disadvantage, depending on your spouse. Oh, the marriage thing I didn’t consider as one of my secrets, but it is in a way…..

My 1st secret we’ll be discussing is how I’ve kept private lenders on my team. If you don’t know, private lenders are people with different amounts of investment capital you can tap in to buy houses. They require none of the following: Tax returns, credit report, down payment, or even appraisals. They’re lending you money based on your expertise in being able to give them a high rate of return, safely. We typically pay 7-9% APR(Annual Percentage Rate) for all of our lenders and only pay ONCE the property sales. You must cultivate a relationship with these people so they feel comfortable lending you tens if not hundreds of thousands of dollars. We have a complete prospectus(presentation) for you to use if you would like to sit down and attempt to procure financing from a private lender. If you’re new, I don’t recommend using these types of lenders because you could go out there and screw it up and lose their money. Newbies are recommended to use Hard Money like Richmond Mortgage because they’ll be a 2nd set of eyes on your deal to let you know how to run it properly until you get some experience. 

     Recently I received a disturbing phone call from a lender that I hadn’t used in while. He wanted to know why I hadn’t called him to borrow any of his money. He was a bit irate in his voice like I had done something to offend him. The money he uses to invest is coming out of his SDIRA(Self Directed Roth Individual Retirement Account). If you don’t know about these, I suggest you do more research on how to set one up and use it for REI. We kept talking and I told him I had a deal coming up that we could put him into. The thing you must keep in mind with all SDIRA’s is that they have fees. Your lender may have the IRA set up, but now they’re looking to get their money working. And since most lenders are greedy, or they wouldn’t be listening to you anyway, how can you persuade a lender to choose you over all the other investors or other forms of investing their money?. Well, my secret is simple. I offer to pay all the maintenance fees that are associated with their account. Every year, I simply write a check to pay for their IRA custodian fees. It can range anywhere from $300-$800 per lender. That’s a small price to pay in return for securing funds for your investments. Once you pay for your lender’s fees, they’ll love and respect the fact that you’re so confident in your business, you can afford to not only pay them a high rate of return, you’re also willing to sacrifice more money to assure they keep lending to you and not to a competitor. Take the time to learn what fees you can possibly pay to get people to like you even more. It’s worked for me year after year and the lender hopefully won’t even think about lending that money to somebody else…