Private Money for buy and hold

2 Replies

How does one go about finding private money lenders? I'm having a problem with getting offers accepted on 40k-80k single family houses and competing against the full cash offers close in 10 days people where as I am not in the position to do that quite yet. My offers get thrown out immediately. I am looking at these deals as buy and holds and some would only need minor repairs and/or already currently being rented and cash flowing. How do I present a deal like this to someone with private money. Do they get their money back on a refinance or how would I pay them back?

@Kyle Wenger

You need to layout the plan for protecting ones money. What is the interest rate? Time you will need the money? On a buy n hold I borrow the private funds for 120 days. This includes rehab and selecting a tenant. The bank will take 8 weeks to refi. I use commercial loans for the refi. If one investor you can create a mortgage and a note. With multiple investors a JV Agreement, a LLC to protect the funds. There are multiple ways to out this together. Find an attorney to draft the legal documents.

@ Ken

How come you go with a commercial instead of conventional home mortgage?

Here is my example of a 2 unit:
Asking price: $78,000
Rental income: $1300
Monthly expenses: $853

After figuring in all expenses, it would cash flow around $450...but if I don't make any repairs to it, wouldn't it only refinance for the price I paid for it? It wouldn't be worth any more because I wouldn't be making repairs. I'd just need the private money lender so I can compete with other offers. How can I make it so he gets a return on his investment of the $78k+ closing costs? I think i'm missing something with how to structure deals with private money lenders...appreciate the help!!