So I put a post on craigslist to find some seller financed homes. I got one offer for a mobile home which i was not interested in and another person asking me if i was looking for people to invest in a property with me. I said that was not my original reason for the post but I am interested and if (WHEN) i find something ill let him know.
So The last guy gave me an idea. If he is one that wouldn't mind going into a deal with me maybe others will be as well. So with that being said i would like to go on a Private lending campaign. Sending out hand written personal letters, adds on social media, newspaper, craigslist, handing out business cards and posting signs out.
Are there any restrictions on having to many people fund your deals at one time? ( I don't like the idea of sharing all the money with everyone anyway, just needed to as)
Do you think this is a good idea? If so why/whynot?
I plan to go to the more wealthy neighborhoods and send letter first and see how that goes. I want people to see me as professional so i need everything to be on point.
I think this would call for a website and a separate telephone number. Any suggestions on a website creator? Im going to look on bigger pockets market place because i know they help with things like that. Just wanted recommendation from BP members.
I never did a fix and flip or any other strategy before do please let me know if im out of line with this funding strategy and how i should/could go about it. I living in severn, md close to Baltimore and other areas.
thanks in advance.
Originally posted by @Shaniqua Dupree :
... i was looking for people to invest in a property with me.
Are there any restrictions on having to many people fund your deals at one time?
You better believe there are restrictions, Shaniqua. First, you should be clear by what you mean by "invest in a property with me." Are you looking for debt or equity investors? That is, lenders to loan you money, or partners that own a piece of the deal with you. Borrowing is generally much easier than partnering but can be riskier.
Pooling money from several investors into one deal you all own a piece of will generally involve securities regulations. There are many restrictions on what you can offer, who can invest with you, as well as how or even if you can advertise. Compliance usually requires a registration with your state and the SEC and the cost for this can begin at $15k. Not for the faint of heart and certainly not for the inexperienced. Alternately, many investors are using some of the crowd funding sites to streamline the process and you might check these out.
The easiest way to borrow money is simply to ask. There are few restrictions here, so long again as you are not pooling money from more than one investor into one loan. You can normally ask any one person to loan you money for one deal. This person would be the sole beneficiary (i.e. lender) on a first position note. You can also ask another person to loan on another note for the same property, in second position, then third position, etc.
Some states, like CA, but not all of them, allow a note to be fractionalized as long as it's originated by a mortgage broker. If you needed say $100k, five people could loan you $20k each, with all their names as 20% beneficiaries on one first position note. There is generally no securities restriction here in CA, but I don't know the other states.
These are a few of top level options. Under no circumstances should you advertise for investors until you've spoken to a securities attorney, Shaniqua (and then only until you get some experience under your belt).
The only way to gain experience is either by doing it or finding someone else who is doing it.
I appreciate all of your advice and will not take it lightly. However, i feel as though your saying go but dont go. You said the easiest way to get money is to just ask. But i have to market right or else i dont have people to ask. Am i looking at this the wrong way? I could ask family but i dont want to use their money so next comes strangers. I also dont plan to use many investors for one deal. My aim is to have a little black book with private lenders. I would like debt or equity lenders. Both could come in handy just knowing that they are there is comforting.
Im glad you responded to my post especially because you are a lender. PERFECT. But im still stuck on the experience part of it all. It seems like investors around me are stingy with their knowledge or willingness to help and i understand why. Thats less money for them if they help me. No better teacher than experience. Im not one to jump and do risky things without seeing how other people jacked up or learned from what i want to do. I love to ask questions. Questions prevents crazy situations.
Have you looked into Hard Money Loans? These are going to be more expensive then a private loan but are easier to obtain. These are also a great way to get started because the Hard Money Lender has a vested interest in the success of the property. Instead of looking for private lenders, why not look for a local HML with experience rehabbing houses? You'll get your money easily (albeit more expensive then going private) and you'll also get an experienced set of eyes on the deal before you commit to it (helping you to avoid making a bad purchase).
i have thought about hard money lending but they are very expensive. I would like private lenders because i know we could take equal fall if worse comes to worse.
Maybe I'm over simplifying this, but why not just go to a bank and get a standard real estate loan? You'll most likely get a lower rate and a longer term than private money loans.
my understanding of a private lender is someone with money that will lend ot to you ( not necessarily needing a private lending buisness). Maybe im wrong. When i say private lendimg i mean specifically friends, family, or local investors who want to invest with you.
Also i am going to be going through a bank for funding. I was speaking to another investor and they helped me to understand that it may be best. I just cant seem to get a hold of the loan officer of the bank i want to go through. I left a messahe so hopefully ill Get a call back soon.
I think i am just going to pay for the house out right with cash (20k). And get a consumer construction loan. But id prefer to get a mortgage and go through a rehab program with the bank so that the monthly payment and interest rates will be low.
Do i tell the banks that this is an investment property? I do just want to be sure.
You'll probably have to work through a credit union or a small local bank to get funding for an amount that small. Try checking with the commercial lending department for purchase + rehab funding. Yes, you'll definitely have to disclose it's an investment property. That said, the rates should still be fairly low. The last purchase + rehab funding deal I did was 5.25% interest, 20 year amortization, commercial loan.
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