How to position a partnership with a private lender

Question

Does anyone have any strategies on how to a position a partnership with a private lender in order to start to obtain a Rental portfolio (with no out of pocket capital)

Doug Smith · Answer

No offense, but absolutely, positively in no way shape or form would I, as a lender of over 30 years, provide a loan to someone with no out of pocket capital. There are two types of borrowers that fail at a much, much higher statistical rate than any other...1) borrowers with little experience, and 2) those putting nothing or very little down. There is a reason we lenders require "skin in the game" and experience. As for strategies, do you have any other skill set that you can bring to an experienced operator? Perhaps you can barter that for experience and, perhaps, a taste of the profits and then, later when you're capitalized, do what you're suggesting but now with experience and skin in the game. That's what any good, legit lender is going to tell you.

Colby Fryar · Answer

As stated, most lenders will require some level of capital and will want you to show collateral.   I would find an equity partner instead and you could potentially do a deal with no money down as long as you are providing most of the sweat equity and you can demonstrate you have the necessary "experience". In such a scenario, you are going to likely have to give up much of the deal in the beginning.  I've never had a deal where I did not have to infuse some amount of capital.

Chris Seveney · Answer

@Rickie Lattimore

Give up 95% of the equity - oversee the properties and collect a management fee. Something is better than nothing

Jonathan Greene · Answer

Why would someone lend you money on properties without money for the downpayment? Or all of what @Doug Smith said. What are you giving them if you don't have money? Where is the win for them? It's way too risky.

How to position a partnership with a private lender

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