Finding private money lenders without attending a REIA

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Finding private money lenders without attending a REIA

James McGovern
Flipper/Rehabber · Bloomfield CT · Member since 2020 · 1k+ posts · 408 votes

Whenever someone asks about finding a private money lenders without (someone who uses their own money and doesn't go to the capital market) they almost always are guaranteed to get a boilerplate answer such as attend your local REIA. Having attended multiple they aren't always found there

what can we do to help those looking not chase ghosts?

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Mitch Messer
Lender · Playa del Carmen, México · Member since 2014 · 2k+ posts · 1k+ votes
5mo
Quote from @James McGovern:

Whenever someone asks about finding a private money lenders without (someone who uses their own money and doesn't go to the capital market) they almost always are guaranteed to get a boilerplate answer such as attend your local REIA. Having attended multiple they aren't always found there

what can we do to help those looking not chase ghosts?


Yes, investors seeking help finding private lenders DO get "boilerplate" answers about attending REIA meetings...

... for the EXACT same reason that single folks seeking a romantic partner are advised to "go to church" or "head to the bar at Happy Hour."

That reason is THIS: Sometimes, that approach works! And sometime, not so much.

But, it's not a guarantee. There IS no guarantee. This is art, not science!

The truth is that you secure a private lender and a mate the exact same way.

You don't HUNT for them; you ATTRACT them!

In BOTH cases, you've got to put yourself out there, showing how you operate and what is important to you.

As a real estate investor, every deal you complete should be posted on your SM accounts: BiggerPockets, LinkedIn, Facebook, Instagram, TikTok, etc.

And don't just post the financials. You should talk about how you found the deal, the challenges you faced completing the project, and any unexpected challenges you had to resolve. Talk about how you funded your deal, and mention how you can work with money partners in a win-win manner.

Don't sell: Explain!

The goal is to BE the kind of person that others WANT to be involved with!

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  • Erik EstradaBusiness Member
    Lender · Member since 2022 · 6k+ posts · 1k+ votes
    5mo
    Quote from @James McGovern:

    Whenever someone asks about finding a private money lenders without (someone who uses their own money and doesn't go to the capital market) they almost always are guaranteed to get a boilerplate answer such as attend your local REIA. Having attended multiple they aren't always found there

    what can we do to help those looking not chase ghosts?


     Start a broker shop and make the connections and relationships. If you are expecting a lender to magically give you money for your deals, with no track record, no credibility and no experience, you are in for a world of rejection and pain.. 

    Even when I started my company as a broker, very few wholesale lenders, private lenders, commercial lenders took me seriously. They saw a kid, with very few fundings, no reviews and could be a complete waste of time. 

    Direct lenders, want to work with people that have a track record. That have some sort of credibility. You have to start by sticking to a few lenders, send them referrals (if you don't have much business) and get to know your reps on personal level. Sometimes you have to take them out to lunch, send them gifts, in order for them to give you that level of service and terms you are expecting. 

    If you treat people like a number or another term sheet, they will treat you the same way. 

    [email protected]818-269-7983
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    • Chris SeveneyBusiness Member
      Moderator
      Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
      5mo

      @Erik Estrada I just did a presentation last night on raising capital, and that was a big topic of conversation that you mentioned. The fact that if someone has no experience, no business plan, and no understanding of real estate, and if they think they're going to get money, I tell people the comparison is if you think someone will give you money, it's the same as someone going to step on a plane where a pilot has never flown a plane before or never been in a plane before. Reality is never going to happen. It's just like anything in life; it's all about who you know, so whether you go to events, meet people online, whatever it is, it's a very simple strategy when you boil it down. 

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  • Erik EstradaBusiness Member
    Lender · Member since 2022 · 6k+ posts · 1k+ votes
    5mo

    I still go to mortgage conferences. It is one of the best ways to find new lenders and get to meet your rep face to face. They are highly effective 

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  • Mitch Messer
    Lender · Playa del Carmen, México · Member since 2014 · 2k+ posts · 1k+ votes
    5mo
    Quote from @James McGovern:

    Whenever someone asks about finding a private money lenders without (someone who uses their own money and doesn't go to the capital market) they almost always are guaranteed to get a boilerplate answer such as attend your local REIA. Having attended multiple they aren't always found there

    what can we do to help those looking not chase ghosts?


    Yes, investors seeking help finding private lenders DO get "boilerplate" answers about attending REIA meetings...

    ... for the EXACT same reason that single folks seeking a romantic partner are advised to "go to church" or "head to the bar at Happy Hour."

    That reason is THIS: Sometimes, that approach works! And sometime, not so much.

    But, it's not a guarantee. There IS no guarantee. This is art, not science!

    The truth is that you secure a private lender and a mate the exact same way.

    You don't HUNT for them; you ATTRACT them!

    In BOTH cases, you've got to put yourself out there, showing how you operate and what is important to you.

    As a real estate investor, every deal you complete should be posted on your SM accounts: BiggerPockets, LinkedIn, Facebook, Instagram, TikTok, etc.

    And don't just post the financials. You should talk about how you found the deal, the challenges you faced completing the project, and any unexpected challenges you had to resolve. Talk about how you funded your deal, and mention how you can work with money partners in a win-win manner.

    Don't sell: Explain!

    The goal is to BE the kind of person that others WANT to be involved with!

    5Reply
  • Kenneth GarrettPro Member
    Investor · Florida Panhandle/Illinois · Member since 2016 · 4k+ posts · 3k+ votes
    5mo

    @James McGovern

    You can find private lenders anywhere, but it doesn't happen over night. It takes time to build relationships. I will only speak for myself, but I found many private lenders at local REIA meetings. It might depend on the REIA you are attending. To be honest, of all the people that attend REIA meetings, I only found about 5%-10% who are actual investors. The rest want to be real estate investors, but are afraid to pull the trigger or some other thing holding them back.

    It's all about networking and what you bring to the table. If you don't have any experience would you lend to you. Find a partner to team up with to build experience and make connections. I have found many people wanting to partner at REIA meetings as well. This is why people recommend REIA meetings, that is where investors and lenders, real estate agents, insurance providers, attorneys and others attend them. Network! Network! Network!

    1Reply
    • James McGovern
      OP
      Flipper/Rehabber · Bloomfield CT · Member since 2020 · 1k+ posts · 408 votes
      5mo

      @Kenneth Garrett I have had better luck networking on LinkedIn than Bigger Pockets 

      1Reply
  • Bryan Coll
    Investor · Member since 2026 · 30 posts · 8 votes
    5mo

    My suggestion would be going on to local Facebook investing groups to see what you can find (like the local REIA group) and just mention that you are looking for a HML & what your qualifications are to day (how many deals you have done, types of deals, successes with those deals, did you perform well)?

    When I started looking for HMLs, that was the best source of lenders I could find. As some of the other posts mentioned, it was hard at the beginning with limited track record, but eventually you can find someone if you search hard enough & long enough.

    Hard money lending is the wild west. There is no rhyme or reason to someone's lending box. And it only takes one at the beginning. But make sure to treat their money better than you would ever treat your own.

    You don't want to run hard money relationships.

    0Reply
  • Jeff S.
    Lender · Los Angeles, CA · Member since 2009 · 1k+ posts · 2k+ votes
    5mo

    Ghosts? Perhaps the issue is your passive-aggressive approach and cynicism toward H/PMLs, @James McGovern. It shines through on most of your posts here, and this one is no exception. Can you ask a question without punctuating it with negative commentary?

    If you want to meet others who invest in real estate, go to where other real estate investors hang out. Like it or not, the simplest boilerplate answer is real estate clubs. We’ve been lending our own money for a long time and quickly learned that:

    • Word-of-mouth referrals are virtually non-existent in our private lending world. Our borrowers know our funds are limited and are reluctant to share resources they want access to themselves. (Or maybe they just hate us? Hmmm. 😅)
    • We’ve met virtually every borrower we’ve ever loaned to at a real estate club. It’s our primary source of marketing, and it works.

    There are no secrets, but a few observations:

    • When you attend any meeting or conference, always have a goal. Perhaps your goal is to meet two potential lenders (or borrowers in our case), or to get three legal questions answered by a lawyer, if present. Or to find a property manager, or an agent in a specific neighborhood. Don’t show up not knowing why you’re there and hope to get lucky. You’ll leave disappointed.
    • Consistency is key. You can't go to one meeting, meet no one who meets your goal, and walk out thinking you're looking for ghosts. We can go to three REI clubs, walk out empty, and then meet a new borrower at the fourth. It doesn't mean we wasted your time or that the club is a loser. Consistency also builds credibility.
    • First, always introduce yourself to the club organizer and let them know what you are looking for, i.e., your goal(s). They will know those who regularly attend and possibly their reputation. Whether in attendance that night or not, the club organizer can introduce you. This is especially true if you regularly attend their club and they recognize you.
    • Never sit down, except when someone is presenting. You came to network, so stand and meet as many people as possible. How many have I seen sit down as soon as they enter the room, never to return because they didn’t meet anyone?
    • Everyone wants to meet you. That’s why they came too. If you don’t know what to ask, ask “What do you do in real estate?” This always works.

    Networking is an art, but it doesn’t work every time. A change in attitude and some simple goals might serve you better, James.

    4Reply
    • James McGovern
      OP
      Flipper/Rehabber · Bloomfield CT · Member since 2020 · 1k+ posts · 408 votes
      5mo

      @Jeff S. The two private money lenders I have used in the past encourage me to share their contact information with talented flippers. I kbtthey want to make money so it is in my best interest to help them

      0Reply
    • Jay HinrichsBusiness Member
      Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
      5mo
      Quote from @James McGovern:

      @Jeff S. The two private money lenders I have used in the past encourage me to share their contact information with talented flippers. I kbtthey want to make money so it is in my best interest to help them


      One way to find private lenders is to have your title rep do a search on private mortgages get a list of those and then run down who the bene's are and solicit them.. these will be folks that have made a private loan.. Also asking nicely at your title/escrow officer they know who the private lenders are and might give you names to call. 

      When ever I take back a private longer term note there are about 5 companies that will start e mailing or sending me letters to buy my note.. this is how they get their data. 
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    • James McGovern
      OP
      Flipper/Rehabber · Bloomfield CT · Member since 2020 · 1k+ posts · 408 votes
      5mo

      @Jeff S. What is wrong with cynicism against lenders who get their money from the capital markets? They cost much more when compared to lenders who use their own money. 

      investors on bigger pockets benefit by understanding this

      0Reply
    • James McGovern
      OP
      Flipper/Rehabber · Bloomfield CT · Member since 2020 · 1k+ posts · 408 votes
      5mo

      @Jay Hinrichs your suggestion doesn't work in a state where attorneys do closing as they sell the title insurance 

      0Reply
    • Scott WolfPro Member
      Lender · Boca Raton, FL · Member since 2014 · 1k+ posts · 956 votes
      5mo
      Quote from @James McGovern:

      @Jeff S. What is wrong with cynicism against lenders who get their money from the capital markets? They cost much more when compared to lenders who use their own money. 

      investors on bigger pockets benefit by understanding this


       That's not always true. A lot of private lenders charge more on interest and points because they can based on the borrowers that approach them.

      2Reply
    • Erik EstradaBusiness Member
      Lender · Member since 2022 · 6k+ posts · 1k+ votes
      5mo
      Quote from @Jay Hinrichs:
      Quote from @James McGovern:

      @Jeff S. The two private money lenders I have used in the past encourage me to share their contact information with talented flippers. I kbtthey want to make money so it is in my best interest to help them


      One way to find private lenders is to have your title rep do a search on private mortgages get a list of those and then run down who the bene's are and solicit them.. these will be folks that have made a private loan.. Also asking nicely at your title/escrow officer they know who the private lenders are and might give you names to call. 

      When ever I take back a private longer term note there are about 5 companies that will start e mailing or sending me letters to buy my note.. this is how they get their data. 

       Pretty solid! I do this too when I lose a deal. I check who the borrower closed with and make that lender my best friend :) 

      [email protected]818-269-7983
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      1Reply
    • Erik EstradaBusiness Member
      Lender · Member since 2022 · 6k+ posts · 1k+ votes
      5mo
      Quote from @Scott Wolf:
      Quote from @James McGovern:

      @Jeff S. What is wrong with cynicism against lenders who get their money from the capital markets? They cost much more when compared to lenders who use their own money. 

      investors on bigger pockets benefit by understanding this


       That's not always true. A lot of private lenders charge more on interest and points because they can based on the borrowers that approach them.


       Yup. I mean it's pretty simple business. More risky borrower= higher premium. It works like that everywhere.. 

      [email protected]818-269-7983
      LuxePrivate Investments LLC 572 Reviews
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    • Erik EstradaBusiness Member
      Lender · Member since 2022 · 6k+ posts · 1k+ votes
      5mo
      Quote from @James McGovern:

      @Jeff S. What is wrong with cynicism against lenders who get their money from the capital markets? They cost much more when compared to lenders who use their own money. 

      investors on bigger pockets benefit by understanding this


       That's just the way the industry works! I think if you really have a burning desire to help investors obtain cheaper capital, you should start a fund :). 

      [email protected]818-269-7983
      LuxePrivate Investments LLC 572 Reviews
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      1Reply
    • Erik EstradaBusiness Member
      Lender · Member since 2022 · 6k+ posts · 1k+ votes
      5mo
      Quote from @James McGovern:

      @Jeff S. The two private money lenders I have used in the past encourage me to share their contact information with talented flippers. I kbtthey want to make money so it is in my best interest to help them


       Key word there, "talented flipper". Everyone that is doing private money wants a talented flipper. Unfortunately, there are very few "talented flippers" a lot of Mickey Mouse flippers, over leveraged flippers, distressed flippers, etc.. Hence why there are Hard Money lenders that exist to bail out these clients, help them restructure, or get them out of a very tight situation. 

      If everyone was a "talented flipper" hard money lending would not exist. You'd have chase bank, wells, and other large banks lend money to flippers for very cheap..  

      [email protected]818-269-7983
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    • Jay HinrichsBusiness Member
      Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
      5mo
      Quote from @Erik Estrada:
      Quote from @James McGovern:

      @Jeff S. What is wrong with cynicism against lenders who get their money from the capital markets? They cost much more when compared to lenders who use their own money. 

      investors on bigger pockets benefit by understanding this


       That's just the way the industry works! I think if you really have a burning desire to help investors obtain cheaper capital, you should start a fund :). 


      it is a little comical flippers want to make a much as possible but want to cram down the money that actually allows them to make any money.. 
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  • Matthew BernalBusiness Member
    Investor · Austin, TX · Member since 2021 · 497 posts · 126 votes
    5mo

    You’re not wrong . Just go to REIAs” is probably the most overused (and least helpful) advice out there.

    In my experience, most private lenders aren’t actively advertising themselves at meetups, they come through existing deal flow, referrals, or brokers who already have those relationships in place.

    The real shift is moving from where do I find lenders to how do I position a deal so lenders come to me.

    If you’ve got a deal you’re trying to fund (rental, flip, etc.), I can usually point you in the right direction or connect you with the right type of capital.

    What kind of deal are you currently working on?

    [email protected]832-981-3190
    1Reply
  • Alan F.
    Flipper/Rehabber · CA · Member since 2023 · 1k+ posts · 1k+ votes
    5mo

    Read Jeff's post very slowly. Remember the arguments where you were calling people pedo's etc? Probably not great way to network. 

    2Reply
  • Marcus Auerbach
    Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes
    5mo

    You have looked on Google, right? 

    "hard money + your hometown"

    Believe it or not, but anyone who has been doing this more than 3 times has a website and wants to be found.

    1Reply
  • Caroline Harb
    Member since 2021 · 13 posts · 3 votes
    5mo
    I love a lot of the responses above. The best advice I can give is to start building your social media presence. I’ve had lenders come up to me after following me for months and tell me they want to lend with me bc they’ve seen proof. Building relationships and story telling will be one of the best ways to make this happen for you.
    1Reply
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