I know people with money, how to ask for Private Lending?

Question

I really want to accelerate my business and use the BRRR method, problem is I need one of those coveted private lenders. I personally know several people who I can ask; present a business plan what have you, my question is what's the best way to approach them? What's worked for you? What not to do?

Darren Eady · Answer

Focus on the transaction and the potential income for the investor you know.  Most people that have money have money for a reason - they know how to spot a good investment.  I wouldn't focus on the fact that this is your first deal, just focus on the deal and how it is going to work for you and for them if they will partner with you.  It might take a little posturing to get the private lender you want to work with by acting like you know what you are doing.

Account Closed · Answer

Amanda,

That's a fantastic question and I'm curious to see what people say. I am working on private money as well, I'm developing my business plan over the next couple of weeks.

Good luck

- Austin

Brian Gibbons · Answer

Learn about Private Lending with this book

David Faulkner · Answer

Personally, I wouldn't ask anybody to invest their money until I'd already invested my own money in successfully the same way. Most private lenders won't lend on somebody's first deal, unless they are friends or family, and that has dangers of its own.

If you do pursue private money, don't ask them for money, present them the investment opportunity. If you don't feel comfortable presenting the opportunity, you could "go fishing" by talking about what you'd like to do as an investor, and how you know they have been very successful financially and ask how they would advise to get started. Even if you don't get the money, you'll likely get some good advise.

Be generous and not greedy with your terms ... focus on getting them a great return and getting you some great experience. Then, you can parlay that great experience into great returns for you once you have developed a proven track record. If they do fund, make sure they get paid back, no matter what, even if you lose money; reputation and relationships are more important than money, especially early on. Good luck!

Account Closed · Answer

@Amanda Young

There is a guy in Springfield Ohio who publishes a guide with everything you need to know about raising and using private money.  He's been the "go to" guy on the topic for years.  His guide really isn't that expense.

I can't mention his name here even though I have absolutely no stake in anything he offers because the BP police will flag it, but just to a websearch for "private money springfield ohio", and you'll find it.

Angela Harding · Answer

Some really good posts here. I have to caution anyone on using other people's funds unless they do have the experience and know their market very well. I recommend newbee's to start with a realtor license and really know how to use the resources it offers. Find out who is really doing well in your area and offer some time to help them and be a part of what they do for a few deals. Confidence is what helps you borrow funds and talk to people. When you are confident and excited about what you do then you won't even have to ask. The money just comes to you. I do a lot with different types of partnerships, my own money too, and borrowed funds from IRA's. Now I have so much opportunity that I have put together a private placement fund and will combine all the money into one investment fund. This was not an over night project. It has taken years to get to this level and many professionals that I learned from first hand. Not national speakers, not videos or books, just showing up when ever and where ever and doing it as a real estate broker first, then an investor. Working with people within my community that are really making good money, successful, and working honestly without taking advantage of people.

Amanda Sutherlin · Answer

Thanks Brian, I'll be picking that up shortly.

Leigh C · Answer

@Amanda Young

Why aren't you looking to get your real estate license and do PM?    Seems like you can get a lot more experience quickly if you start handling properties for other people.     It puts you in touch with possibly people who "want out" and would be open to owner financing to you also.

From experience, i hate renting property, but i'm not against owner financing property to investors looking to cash flow it.     I just don't want all the risk.

I know people with money, how to ask for Private Lending?

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