How do I find private lenders?

Question

My wife and I are in the Omaha Nebraska area and we are starting to plan our home flipping business. I am curious on how to get into contact with private lenders since we currently do not have the capital at the moment to invest.

Jay Hinrichs · Answer

also be very realistic if you have no capital and no real experience its a pretty tough thing to do .. family and friends are who help most people begin.

you may have other skills that mitigate your lack of capital and experience.. like you may be a GC or in the business that really helps.

but if your just Hey I want to flip houses never did it and have no capital  you just need to be realistic of what private investors look for. and beginners is generally not the ones they will risk their money with .. just say in.. so you don't get discouraged or have expectations that are not reality.

Collin Schwartz · Answer

@Josh Miller what Josh said perfectly sums it up. Education is key, come out to some of the local meetups.

Brian Egr · Answer

Wow I got mentioned by @Jay Hinrichs, I feel as star struck as a teenage girl at a Justin Bieber concert.  I love your business model Jay.

@Lucas

@Lucas Newey I honestly missed the part where you mentioned you don't have any capital, you're going to need your own capital. To start with, hard money lender charge a lot of interest, it could be up to 1.5% per month, and you're going to have to cover those monthly costs.  Also, HML won't lend for the repairs (typically), so you're going to need capital for that part.

But....DON'T GET DISCOURAGED!! If you have no money and you are willing to put in the work there are ways to build up capital.  Go to your local REIA, get to know the players in town.  Then start door knocking to find deals, when you find one whole sale it to the players you met at meeting.  Save the money you make from 7-8 good whole sale deals and now you've got your own capital to start.

Josh Miller · Answer

Hi Lucas, I may be talking out of turn but I see a lot of folks trying to get into real estate and asking questions such as how do I set up my LLC or where do I find a good accountant, or how do I raise money.  I always recommend first getting your head in the right place, second, getting educated, and third, finding a good deal.  With a good enough deal, life becomes a whole lot easier, including finding money.  I consider a good deal anything at 70% of ARV minus repairs.  Like Jay mentioned above, family and friends is probably your easiest method of raising private money bet but I like the idea of going with an established local investor.  It's easy to make money in this business but even easier to lose money and going with an investor will help ensure that your flipping numbers are realistic and your not forgetting about any hidden cost.  Hope this helps, if not feel free to let me know any specific questions you might have.

Brian Egr · Answer

Hi Lucas.  Best way is to go to a local real estate meet up.  I know there are a couple different groups in Omaha, you could probably find them on Facebook.

Teri Feeney Styers · Answer

@Lucas Newey listen to Podcast #289 right now!

Owen Dashner · Answer

@Josh Miller has some good points.  Money finds good deals.  You will not know if you have a good deal or not until you have looked at enough properties to know the values cold.  And by "enough", I mean a BUNCH.  You also need to understand the distinction between private money and hard money.  Private money (in my experience) has more to do with the relationship you have with the lender and how trustworthy you are.  Hard money typically has more to do with the asset being loaned against.  Obviously experience level comes into play with both types.

You gotta be honest with yourself though.  Put yourself in the lender's shoes and take a hard look at yourself and what you bring to the table.  Would you loan $100,000 or more to someone that had no skin in the game or experience?  Ask yourself what would make you feel comfortable enough to loan someone money, then work on those things.  Whether it be bringing in a partner with more experience, getting enough knowledge to have a coherent plan together, saving some capital, etc.You wouldn't try getting a loan for a restaurant or a consulting business or whatever with no plan or experience, would you?  This is a business like any other, so you need to put in the reps and get a plan together so that you can become a good enough lending risk to get started.

Also, network like crazy!

Kenneth Garrett · Answer

@Lucas Newey

@Brian Egr is correct.  Local groups are the best way to network.  The REIA’s typically have at the beginning of the meeting investors introducing deals, partners, wholesales, etc.  Attend local meetups as well.  Private lenders do not advertise they have funds.  It is all about networking.  Partnering may be another option.  If you do not have a track record partnering is a way for you to get started and build your credentials.

Good Luck.

How do I find private lenders?

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