I am becoming very frustrated. I am a Canadian, looking to buy my first property. I do not consider myself a newbie however as I have been learning and researching for some time. I had decided long ago to go the private money route, for many obvious reasons. I have found quite a few, messaged back and forth with a ton of them and have become very frustrated. I have been already scammed once (when I was starting out and very green) and swore I would never again pay upfront fees. Here is my question, in anyones experience is there legit private lenders that charge legit fees or should I run the other way anytime I see this? I have come across a few sites that were supposedly credible as far as having legit lenders yet, most all I talk with want some sort of upfront fee in the end!
Would love some constructive feedback on this!! I have properties I can offer on now and am only stopped by this obstacle!!
Thank you in advance!
Your quote "I had decided long ago to go the private money route, for many obvious reasons". What obvious reasons? The rates will be higher and the terms shorter than going to a bank. Private lenders are people you know, so you'll also have to be comfortable approaching your family, CPA, lawyer etc to ask for money.
No, there shouldn't be many upfront fees beyond an appraisal for most lending. Keep shopping around if there are substantial upfront fees.
My real estate lawyer deals in private lending, and has a network of other contacts who do as well. @Shaun Anderson I would suggest talking to a RE lawyer in Regina (or even elsewhere in the province); they might be lenders themselves, or should at least know of private lenders.
Private lenders are people you personally know and trust you to take care of their money. If you're going back and forth with people who want up front fees, you're dealing with a hard money lender. You find private lenders by talking to everyone you know and everyone you meet about what you do. Most won't care. A few will. A few of those will have money. A few of those will, over time, be willing to invest in you. It takes time and a lot of contacts, but such people are out there.
Don't be fooled by hard money lenders who call themselves "private lenders". That's become a very common practice. And, in many cases, they are lending money they're getting from individuals. But these are not what you're asking for.
Jon Holdman, Flying Phoenix LLC
is right, just settled an investor mortgage with a bank at 4% interest, 80% LTV fixed for 30 years. That's hard to beat with private lending. Just sold another property to a rehabber with private lending, he was paying 8% with a one year balloon. See the difference?
The first place to look for private money is people who know and love you. AS I talked about in Bigger Pockets Podcast #82, I started with no money and the first 11 deals were all essentially 100% financed. My parents lent me $2,500 for the first one to get me going.
Take a look at @Brandon Turner
's new book which is all about financing on the down low.
Reread Jon's post three times! Private lenders do not charge upfront fees. The attorney mentioned as lending money is a hard money lender, seeking or advertising to make loans is not a private lender function, those that do are hard money lenders, they are seeking the business of lending.
I have no idea about Canadian finance laws, but that is the position of lending in the U. S. :)
Bill Gulley, General Real Estate Academy | https://generalrealestateacademy.com
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