Questions about Buying Properties with Private Financing?

Question

Hi,

I have a list of private lenders and I want to send out mailings to them requesting private financing. I have seen training provided by real estate gurus that also provide a list private lenders in the area. Since I already have the list of private lenders, I do not plan on taking these trainings.

I have the following questions:

- I will be sending out mailings to private lenders with offers of higher percentage or interest than the banks. Since I do not know these people personally, will I be violating SEC (Securities and Exchange Commission) guidelines?

- Can anyone please point me to sample postcards or letters targetted towards private lenders?

Any suggestions are greatly appreciated...

Thanks!

Vena Jones-Cox · Answer

Lokesh--

I don't care what the gurus told you, making an offer of this nature to someone with whom you have no pre-existing relationship is absolutely, positively, illegal.

Vena

Will Barnard · Answer

Forming relationships and becoming an expert on retirement investing (self directed options, 401k's, etc) are two good ways to get private funding. Educating others on their options will put you in a position to get their funds invested with you rather than stocks, etc.

Lokesh W. · Answer

ok. Thanks for the tips on obtaining private financing... Just to clarify, these are not hard money lenders. I am talking about private financing who will get an annual return on their money...

Jeff S. · Answer

Telling a lender, private or otherwise, that you’re willing to pay more than a bank is not illegal.  Isn’t that what you asked?  Were you going to quote a specific return?  I assume here that you would sign a brokered noted secured by a 1st position trust deed or mortgage.

Telling a private lender, or anyone else for that matter, that you’ll guarantee a return as their JV partner, LLC member, syndicator, etc., is absolutely illegal.  Here, they are not acting as a lender but as your partner -- a not so slight distinction, but also not what it appears you asked.  With due respect Lokesh, this is all a waste of time.

The best way to get the attention of a private money lender is to show them a killer deal, requesting a secured loan at a safe and appealing LTV.  I suggest you do this first with a phone call, to gage interest, and then follow up with a detailed email that includes photos and numbers.

The deal comes first. Focus on that and forget the postcards.

Jeff

Lokesh W. · Answer

Thanks to both of you Will and Vena. I guess this is something I have think about. I will try to find private money from the local investment clubs first and see how that goes...

Will Barnard · Answer

That is the simple answer, however, many people still do it while others simply do not offer any specifics (such as retrun rates). I am not an attorney and your question involves the need for legal advice so I suggest you seek some out to properly answer your question and get the proper legal advice for what you want to do.

Questions about Buying Properties with Private Financing?

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