How to find a Private Lender??

18 Replies

I am looking to try and get into Real Estate Investing. I want to Buy & Hold rent out multifamily units to make passive income. How ever my credit isn't the best.

I live in a duplex currently & Want to buy it from my landlord. He owns it in full,  he will sell it to me for $77,000 he showed me the Tax documentation its worth $85,200 I rent the top unit for $425/ month fully furnished 1 bed / bath full kitchen, The down stairs is rented out as a 1 bed room 1 bath, fully furnished for $495/ month, ( this could also be a 2 bedroom and rented out for $600-$650/ month. The currently land lord is using the one room that's closed off from the other living area with doors as a Law office. This place is Zoned as G2- Commercial. So I could rent out that room to a local business such as a car insurance place or what not for additional income. The down stairs been rented for 4 years by the same guy. upper and lower have its personal entrance. the upper level having a read deck that's like 12x12 1 story up.

My problem is my credit is crap I cant even get a vehicle and i Need a new one bad mines on it last legs, I was wondering do private lendors lend money for personal use other than buying homes and what not? I was thinking of trying to get 5 year loan from a private lender / investor, That I could use To buy a vehicle, get dental work I need, as well as pay off all my debts to fix my credit? I was thinking of getting something like a $20,000 - $25,000 loan & pay interest on what ever is agreed to in contract, so the investor makes money & I myself benefit by getting everything back on track.

There is another property here in town i'm interested in buying, I not found out what its worth yet or anything but its a triplex for sell with 3 tenants good tenant history bringing in $1,100 / month they are all 1 bed room with unattached garage, all snow removal and yard work done by tentants its in the contracts, The place is for Sale for $49,000 I figured I would bring in about $800 profit before taking out 20% for maintenance.

I just cant do anything till I fix my credit & get back on my feet. So was thinking maybe i could get a loan from an investor. would be win - win, They make profit over 5 years interest & I set myself up to be able to star pushing forward into REI.

Private lending is different from Hard Money correct? Are Hard money loans short term? What are Interest rates normally like for 5-7 year loan from a private lender?

Sorry for this huge long post. Any replies Thanks in advanced!

@Bret Rubash I didn't read your whole post but tax documentation only provides assessed value.. not market value.. there is a possibility that it may be close but it varies by market..

I was just googling private lenders and all I find are Scamy websites like Privatemoneygoldmine.com that sell you lists of lenders you can contact, That they somehow pull from the web somewhere. don't see anything that seems like a legit list of private lenders / investors. 

@Bret Rubash No dude.. don't use zestimate.. look for comparable properties that sold.. you can use the examples that Zillow provides but you need to do the due diligence yourself.. sometimes you have to use Google maps and zoom into the front of house to compare.. With your experience I would just contact a realtor..

@Hai Loc Oh I see. I am not purchasing anything yet anyhow so I'm still doing research the Attorney that offered to sell it to me told me hes not even going to list it for sale just if i'm interested I can buy it cause I told him of my goals of buying Multi-Family units to get started into REI. Right now I'm trying to find out how to find & contact a Private lender to see about taking out a loan from him/ her personally to use to pay off all my debts to better my credit, buy a vehicle & get some dental work done. I need to do this first before I can do anything. I'm Trying to get $20k-$25k & I work out a payment plan with the lendrr with set interest rates and 5-7 year contract.

Bret.  This is a real estate group.  Car loans and dental work are not something you will find help with here.  What I find interesting is at no point do you mention your employment, or how you plan to repay a loan.  

Forget the car.  Walk or bus.  Get on credit karma and credit sesame and follow their recommendations to improve credit.  

You do have one thing in your favor.  Sounds like you have a willing seller.  You need to talk to your landlord, and see if he will owner finance the duplex.  You would take the burden of renting the place, and doing maintenance off his shoulders.  Work out terms so that you can afford it, but put a balloon on it, so you have to refinance in say 5 years, and buy him out.  You move into his office, live there, and rent your place.  Then you bust your *** to make improvements on the place to make it bring in more rent and increase its value. 

Good luck.

@Terre B. I came here because, yes it is real estate, however you guys know how to find private lenders which i'm trying to find out how to find That's why I came here, plus I have a common interest of trying to live a free lifestyle work free through buy and hold rental properties. I work full time, I am already living in one of the rentals of the duplex I would be buying,  The bottom half is already rented out he has been there 4 years.  I would lIve here free instead of paying $425/ month and he would pay the property payment for me. its basically like giving me an extra $500/ month income just by buying this place. I would stay here while I save more money to find another place to buy I will only buy multi-family 2-4 units and buying this place he told me will include all furnishings since its fully furnished washer and dryer everything down stairs, as well as all furnishings I am using on the upper unit. He has alread put new storm gutters with screens and Roof appears new as well shingles are in perfect shape and not rotten (if you bend them they don't break) .  

@Bret Rubash You could do this several ways . I assume you have decent income and not working at Walmart or Burger King . I would offer to buy it on terms ( land contract ) Aka seller financing with 5,000$ down and make 500$ a month payments . The catch :You would need the 5 grand down out oF your pocket of coarse but also around 2,000$ for closing and some reserves . Based on the numbers you threw out I assume this is in a c or d class neighborhood. A triplex renting for only 1100 is pretty low even for the ghetto . You could do this but you’d have to have some money saved be willling to take risk and have a decent income .

@Dennis M. This is a small town in Wisconstin only 3500 people. The nearest major city is 3 hours a way being Minneapolis / ST Paul. All the houses are cheap here, the local financial guy that talked about 401k talked about the housing never made a comeback here yet from 2006 resession but the housing is steady on the rise.  I've seen lots of houses around 30k -70k range,  seen one that was a 5 bedroom 2 bath with 3 acres of land with a detached garage for $55k. I work at a local Window company I make $15.75 an hour its decent money not necessarily great its the highest paying job in the area & I make in the higher end of the wages due to a skilled job set.  

I how ever do not plan on staying here I hate it here. But that doesntt mean I cant buy something and keep it rented out from long distance I am only here for the low cost of living and good wages. Int the city my cost of living would be double and I make 40% less money for the same job type. 

I think my best option is to just get a FHA loan they have a set down payment of 3.5% would only be $2700 down payment. supposedly they don't go off credit really more so just income.

I was just trying to see about getting a loan to fix everything else with my situation ( New vehicle with low miles, dental work & paying all debts to fix credit) , but seems that's not going to happen & Cant find anything online its all businesses & im not going to waste my time or further damage my credit with more credit pulls. 

It’s not that simple . A fha loan is for those who will live at the property as their residence . You must have decent credit ( don’t know where you heard otherwise)and 3.5% down . You will still need good employment and a decent income and The house must qualify to their standards . You will also need closing money ( someone correct me if I’m wrong in that) and cash reserves to sustain the buildings ancillary costs . What is your credit score , your income and how much do you have saved so far ?? Then we can give you better options on what approach is best for for you 

Originally posted by @Dennis M. :

It’s not that simple . A fha loan is for those who will live at the property as their residence . You must have decent credit ( don’t know where you heard otherwise)and 3.5% down . You will still need good employment and a decent income and The house must qualify to their standards . You will also need closing money ( someone correct me if I’m wrong in that) and cash reserves to sustain the buildings ancillary costs . What is your credit score , your income and how much do you have saved so far ?? Then we can give you better options on what approach is best for for you 

fha wont loan on a commerical property like that.. private lenders are not on the internet or on lists.. those are all scams as you suspected.. your not going to get private money with your situation.. FHA is the way to go .. or NACA or USDA loan

Private lending and hard money lending are the same thing for the most part.  Private lending just tends to be smaller scaled and likely a single person with not as much experience as a 'hard money lender'.  There are plus/minus to both set ups.

Im looking for some help, I have an investment property that I rent out as a vacation home. I purchased the home in 2016 on land contract filing all the necessary paperwork thru a title company and putting down 20%. Im now interested refinancing with a cash out option to move onto another one. However, Im looking for a loan option that offers limited documentation. Can anyone offer advice and or guidance for me in the great state of MI.

Chad

Originally posted by @Bret Rubash :

I am looking to try and get into Real Estate Investing. I want to Buy & Hold rent out multifamily units to make passive income. How ever my credit isn't the best.

I live in a duplex currently & Want to buy it from my landlord. He owns it in full,  he will sell it to me for $77,000 he showed me the Tax documentation its worth $85,200 I rent the top unit for $425/ month fully furnished 1 bed / bath full kitchen, The down stairs is rented out as a 1 bed room 1 bath, fully furnished for $495/ month, ( this could also be a 2 bedroom and rented out for $600-$650/ month. The currently land lord is using the one room that's closed off from the other living area with doors as a Law office. This place is Zoned as G2- Commercial. So I could rent out that room to a local business such as a car insurance place or what not for additional income. The down stairs been rented for 4 years by the same guy. upper and lower have its personal entrance. the upper level having a read deck that's like 12x12 1 story up.

My problem is my credit is crap I cant even get a vehicle and i Need a new one bad mines on it last legs, I was wondering do private lendors lend money for personal use other than buying homes and what not? I was thinking of trying to get 5 year loan from a private lender / investor, That I could use To buy a vehicle, get dental work I need, as well as pay off all my debts to fix my credit? I was thinking of getting something like a $20,000 - $25,000 loan & pay interest on what ever is agreed to in contract, so the investor makes money & I myself benefit by getting everything back on track.

There is another property here in town i'm interested in buying, I not found out what its worth yet or anything but its a triplex for sell with 3 tenants good tenant history bringing in $1,100 / month they are all 1 bed room with unattached garage, all snow removal and yard work done by tentants its in the contracts, The place is for Sale for $49,000 I figured I would bring in about $800 profit before taking out 20% for maintenance.

I just cant do anything till I fix my credit & get back on my feet. So was thinking maybe i could get a loan from an investor. would be win - win, They make profit over 5 years interest & I set myself up to be able to star pushing forward into REI.

Private lending is different from Hard Money correct? Are Hard money loans short term? What are Interest rates normally like for 5-7 year loan from a private lender?

Sorry for this huge long post. Any replies Thanks in advanced!

 Bret

Let me be brutally honest.

This property isn't going to work for you.  If your "credit is crap" and you know it's crap because you've had a loan originator tell you it's crap, you have to fix it and the only thing that will fix credit is money and time.  Money to pay what you owe and time to get away from the bad credit and establish good.

Focus on that. Focus like a laser.  Fix your credit and then focus on saving about 8% of the purchase price of whatever you want to buy.  If you're trying to buy a property that's worth 100,000, then save 8000.  Then you'll be ready to buy something.  Then find a nice multi family property to house hack and you'll be off to the races.

Lenders aren't going to lend you money if they know, in your current position, that they aren't going to get paid back.  You have to get your house in order first and lenders will beating a path to your door.

Best of luck

Stephanie

Hi Bret,

The above is sound advice. But I'll simply answer your question. The way to find private money lenders in your market/area is through networking with other real estate professionals. Go to a real estate "meetups" (use Meetup app) near Minneapolis/ST Paul, search for "real estate investing", "flippers", "hard money lending", and other applicable key words. Look for a meetup that has 50+ confirmed attendees, go to that one, and once onsite - simply ask the real estate brokers and other investors which hard money lenders they use. And they will point you to ones that are credible for your market.

Goodluck!