Obtaining Private Money From Actual Private Lenders?!?!

Camille Johnson · 2019-07-31T14:29:36-07:00

I am a bit frustrated and hope this will be received well. This also may be somewhat lengthy as I just need to vent some. I have a 15 yr background in account management/outside sales. My husband (a Chiropractor) and I started a renovation company in 2017 seeing an opportunity for us to start a business without much capital. With my sales/marketing background and his ability to run a team successfully we soon became busy. And good :)After about a year or so we saw the opportunity to take our crews (we don't subcontract) and purchase distressed properties directly from homeowners not on the MLS. We use cash from individuals to purchase and offer double digit returns passively to our private lenders. We use a dedicated real estate attorney and all funds are kept in escrow for the duration of the job. Again, we got busy! We started to get many houses in our pipeline and because we literally do this every single day - we are able to accurately determine renovating costs and have software to determine comps and profits to the penny. You would think this would be a no brainer for a PML to invest in. But it’s not the case! I’m so frustrated and don’t know where to turn. I do not want hard money loans and if I post for guidance that’s all that comes back. Is there fear associated with private lending? We have a lock down/solid system in place with a renovation company in house. How can we get the word out successfully so we can get more private lenders? Any tips or suggestions welcome. Thanks.

Jeff S.

Lender · Los Angeles, CA · Member since 2009 · 1k+ posts · 2k+ votes

7y

I can only imagine the number of anonymous solicitations you’ve received by now @Camille Johnson, from strangers happy to separate you from your money. Prepare to get your lunch eaten seeking money online like this.

BP has many very astute and honorable investors who are happy to share their knowledge -- all free of charge. Unfortunately, it also attracts its share of sophisticated scammers with fake websites, spoofed email addresses, and professional sounding names. There are the obvious telltale signs of a scam that have been written here ad nauseam: upfront money, Western Union, bad grammar, 6% interest, inappropriate license, private insurance, and on and on.

Similarly, Connected Investors, LinkedIn, Craigslist, Facebook, and others are cesspools of scammers. Do you know how to tell the difference between fake and legit?

You are flipping houses, Camille, not borrowing against large commercial properties, which could require dealing with a large out of town lender (and an airplane ticket I'll add). Don’t let your frustration suck you in.

Similarly, you don’t borrow money like this anonymously. Non-conventional money is best borrowed thru relationships. (And to respond to a comment you made in another post, it’s not “all about the deal,” it’s about the relationship. Deals come and go. The loan is made to you.). There are a ton of legitimate lenders out there and he safest way to develop a relationship is face-to-face. Local real estate clubs are the easiest way to find the greatest concentration of serious lenders.

This is a list of some real estate clubs near Chicago and Milwaukee from Meetup.com. With the amount of money floating around now, it would be hard to toss a rock into any of these and not hit a legitimate lender with whom you can have a real conversation. Lenders are climbing over each other now for experienced borrowers and you seem to fit the bill perfectly. Take a few to lunch. Visit a few of your properties. Bring a list of informed questions to ask and get to know one another.

You will lose many deals, but hold your lenders closely. They will do the same.

Good luck, Camille.

10 Reply

Camille Johnson

OP

Flipper/Rehabber · Lindenhurst, IL · Member since 2019 · 21 posts · 6 votes

7y

@Jeff S. I could hug you for the supportive response right now! You literally nailed what is happening to me every single day. When we started in this industry, we brought our combined talent. His of running an office staff and books and mine of sales and marketing. We have the properties - literally right now I have 12 properties in the Chicago and Milwaukee area. These are in suburbs/good schools

We have the crews in house to do all the work but I have never “networked for cash” - All I want is to make passive income for people and we are an honest couple who have worked very hard to get a process driven system in place.

I will definitely check out the meetup groups. If you know of any in particular, please let me know! Or if you know anyone in this area. Thanks so much again @Jeff S.

1 Reply

Jay HinrichsBusiness Member

Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes

7y

Originally posted by @Jeff S.:

I can only imagine the number of anonymous solicitations you’ve received by now @Camille Johnson, from strangers happy to separate you from your money. Prepare to get your lunch eaten seeking money online like this.

BP has many very astute and honorable investors who are happy to share their knowledge -- all free of charge. Unfortunately, it also attracts its share of sophisticated scammers with fake websites, spoofed email addresses, and professional sounding names. There are the obvious telltale signs of a scam that have been written here ad nauseam: upfront money, Western Union, bad grammar, 6% interest, inappropriate license, private insurance, and on and on.

Similarly, Connected Investors, LinkedIn, Craigslist, Facebook, and others are cesspools of scammers. Do you know how to tell the difference between fake and legit?

You are flipping houses, Camille, not borrowing against large commercial properties, which could require dealing with a large out of town lender (and an airplane ticket I'll add). Don’t let your frustration suck you in.

Similarly, you don’t borrow money like this anonymously. Non-conventional money is best borrowed thru relationships. (And to respond to a comment you made in another post, it’s not “all about the deal,” it’s about the relationship. Deals come and go. The loan is made to you.). There are a ton of legitimate lenders out there and he safest way to develop a relationship is face-to-face. Local real estate clubs are the easiest way to find the greatest concentration of serious lenders.

This is a list of some real estate clubs near Chicago and Milwaukee from Meetup.com. With the amount of money floating around now, it would be hard to toss a rock into any of these and not hit a legitimate lender with whom you can have a real conversation. Lenders are climbing over each other now for experienced borrowers and you seem to fit the bill perfectly. Take a few to lunch. Visit a few of your properties. Bring a list of informed questions to ask and get to know one another.

You will lose many deals, but hold your lenders closely. They will do the same.

Good luck, Camille.

Jeff EXACLTY

here is a PM I got yesterday on BP PM

Dear Jay Hinrichs,

In terms of my loan criteria, Please find my terms listed below to help guide you through

I offer a wide range financing that involves the following and many more.

a) Personal loan (unsecured) and (secured) b) Business loan (unsecured ) and (secured) c) Purchase and Rehab (100% financing) d) Debt consolidation. e) Non Asset Based Loan f) Real Estates

2) The loan duration is 3 months minimum and 20 yrs maximum.

3) Interest rate is 5% flat.

4) There is no prepayment penalty.

5) All funds transfer will be made through the bank which means the repayment and the funding of your loan.

6) A loan contract will be secured and issued for you to sign.

7) All information regarding this transaction would be treated strictly confidential.

8) The repayment of the loan will be made on a monthly. Here is another option for you, can you make a total payment of the loan both interest and capital after project has been completed? If yes then let me know.

9) A scanned copy of your valid means of ID will be required before approval will be completed, other means of verification is also considered.

10) Your full contact info and also the loan info will be needed from you. ( a loan application form would be sent)

Get back to me if you're okay with terms then you are assured of getting funded without any further delay once application process is started and completed.

Thank you Jordan Steve

Account Closed Sent 21 hours ago

Report Spam Block Account

Jay, We hope the loan terms suit your needs?

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1 Reply

Camille Johnson

OP

Flipper/Rehabber · Lindenhurst, IL · Member since 2019 · 21 posts · 6 votes

7y

@Jeff S. I am sorry! Just reread and you sent a list! Thanks again. I just sent your post to my husband:)

He’s at a jobsite...

0 Reply

Nicole Heasley Beitenman

Investor · Youngstown, OH · Member since 2017 · 2k+ posts · 2k+ votes

7y

@Camille Johnson I was going to ask if you're attending local REI meetups, but Jeff beat me to it. If you can't find a PL there, you'll find someone who can recommend one.

1 Reply

Jay HinrichsBusiness Member

Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes

7y

Originally posted by @Camille Johnson:

@Jeff S. I could hug you for the supportive response right now! You literally nailed what is happening to me every single day. When we started in this industry, we brought our combined talent. His of running an office staff and books and mine of sales and marketing. We have the properties - literally right now I have 12 properties in the Chicago and Milwaukee area. These are in suburbs/good schools

We have the crews in house to do all the work but I have never “networked for cash” - All I want is to make passive income for people and we are an honest couple who have worked very hard to get a process driven system in place.

I will definitely check out the meetup groups. If you know of any in particular, please let me know! Or if you know anyone in this area. Thanks so much again @Jeff S.

you need a Capital partner for your ramp up.. your going to spin your wheels trying to find unicorn private lenders for lower rates than HM

capital partner will cost more but it will give you the experience you need to find other money.. its a very long process for private money those folks are not lenders they have limited capital.. its a tough job finding those folks.

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Camille Johnson

OP

Flipper/Rehabber · Lindenhurst, IL · Member since 2019 · 21 posts · 6 votes

7y

@Jay Hinrichs - I should mention that my background is in account management/outside sales in corporate America. I worked in such industries as hotels, pharmaceutical and biotech, then most recently building supply. I thrive at sales/building relationships. Additionally, I love marketing strategy. So building a relationship with homeowners to acquire the property is where I thrive. Then we have the labor - Marcus to manage the crews/jobsites. We don’t depend on anyone else for that. We have a dedicated real estate attorney, etc. I don’t know anything about a capital partnership, however I would be completely open to getting funded and paying more to have access to funds and start locking these deals down and getting it done. I just want to be with someone/or a group who can look at what we have done for the big picture it is and can be. It’s hard because even here when I signed up - we have a construction company, we acquire the properties directly and we rehab them. What do I select for my “category” lol. I will say, this conversation has been the best motivation I’ve had in a while.

0 Reply

Jay HinrichsBusiness Member

Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes

7y

@Camille Johnson private money works better in some markets.. depends on your price points.

most private money lenders are capital constrained.. I E they can maybe do one deal at a time.. so your off looking to find the next private lender.. and most private lenders are not unknowledgeable they will know what hard money rates are and will mirror them most of the time.. Not to mention they tend to be nervous etc.. you can continue to network for them but then your going to miss deal after deal just trying to save a point or two and a point or two on interest rates.

Jump on Lendinghome.com coms website they have a great matrix right there on their pricing this will give you base rates.

IL can be higher because of how convoluted the closing process is and the foreclosure process .

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Camille Johnson

OP

Flipper/Rehabber · Lindenhurst, IL · Member since 2019 · 21 posts · 6 votes

7y

@Nicole Heasley Thanks so much! I have a list of REIA meetings around my area and am planning on attending those. And looking for more today that I can go to.

0 Reply

Camille Johnson

OP

Flipper/Rehabber · Lindenhurst, IL · Member since 2019 · 21 posts · 6 votes

7y

@Jay Hinrichs This is exactly my fear. Losing literally hundreds of thousands of dollars simply because I can’t find the money in time. Do you know of or recommend any capital groups that would be good for me to talk to?

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Jay HinrichsBusiness Member

Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes

7y

Originally posted by @Camille Johnson:

@Jay Hinrichs This is exactly my fear. Losing literally hundreds of thousands of dollars simply because I can’t find the money in time. Do you know of or recommend any capital groups that would be good for me to talk to?

Also one thing that I find most folks struggle with in this business is their own capital doing HML takes capital especially if your trying to scale U need down payments you need reserves for tax's insurance most of the time you have to pay your people in advance and wait for the draws etc etc.. flipping with volume you need a lot of your own personal cash..

Or you need a capital partner one or the other.

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Will BarnardPro Member

Moderator

Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes

7y

I am a huge proponent of private money and it funds most of my deals throughout my real estate career. I started with family and friends, and then expanded from there. I told everybody what I do and what I offer. My biggest success in this arena comes from my transaction history, my reputation, and the fact that I don’t ask for money, I offer investment opportunities. While some may say that is splitting hairs, there is a difference.

It sounds like you have systems in place, a performance history, and N ability to control construction costs by keeping it in house. These all provide you a distinct advantage over others who lack them. Attending real estate meet ups, telling everyone you know what you do and what you offer, asking for referrals, speaking to other business professionals like doctors, attorneys, etc will help you locate more private funding.

In the meantime, since it appears you have more deals than money, I would suggest finding a good local hard money lender who could help you fund some of these deals until you build up more private capital.

In the end, just make sure you take care of your lenders, offer them as much security as possible and never let them lose their principle.

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5 Reply

Camille Johnson

OP

Flipper/Rehabber · Lindenhurst, IL · Member since 2019 · 21 posts · 6 votes

7y

@Will Barnard Thanks so much for the insight... My husband and I put together rock solid processes to try and alleviate the “fear” of private lending and thought it would be a no brainer. I have put together a list of meetups and am going to be attending.

0 Reply

Priscilla Swantner

Flipper/Rehabber · Los Angeles CA and Clovis, NM · Member since 2019 · 35 posts · 35 votes

7y

Hi Camille! I'm in the exact same boat as you are! So you are not alone.

My approach has been similar with a small twist. My partner and I have a financial model that we built out, using hard money for the purchase and construction. And the equity is what we raise to cover the difference. We developed and fine tuned an investor presentation to send out. We included: how the ROI is calculated, how much equity we are working to raise, a breakdown of expenses, the expected ROI based on a conservative number, a list of comparable sales to support our ARV.

In the beginning, my business coach advised me to just make a list of all the wealthy people I know and blast it out to them. We got our first couple deals funded very easily. From there, once you have "happy customers" you can do video testimonials with your investors to showcase real people who are happy with your work and ROI. From your original investors, you can ask them who else they know who would be interested in making money like they did. And grow your database.

I know it's a little different from what you're doing. However, the concept is the same. I'm just leveraging more than you. I trust this helps!

3 Reply

Mark Waldrip

Investor · Oklahoma City, OK · Member since 2015 · 48 posts · 86 votes

7y

Hi Camille,
Wanted to share my .02 cents about private funding (pun intended!). I've passively invested in many projects, both as direct ownership investor, syndicate investor or a private lender. I'm not sure from your model if you're wanting investors or lenders. If investors, they own a piece of the deal and share in the profit. If a lender, they hold security for their funds in the form of a lien on the property and expect a set interest rate on the funds. Which of these forms of security do you provide to the people who give you their money? It doesn't sound like either, but I may not be understanding how your systems work.

What do you offer as security in the (unlikely) event that the project craters?

4 Reply

Nathan Shotts

Real Estate Agent · Katy, TX (Katy) · Member since 2019 · 7 posts · 5 votes

7y

@Camille Johnson if you're paying double digits to private lenders why are you scared of hard money? May actually save you a bit.

Also, have you thought of unsecured loans or a line of credit from a small bank? I use both of those tools in my business for cheaper money.

1 Reply

Bob Floss II

Attorney · Northbrook, IL · Member since 2017 · 719 posts · 549 votes

7y

@Camille Johnson Network, network, network. In almost all of my private money deals, the investor and borrower already know each other. You have to get out and talk to people.

1 Reply

Camille Johnson

OP

Flipper/Rehabber · Lindenhurst, IL · Member since 2019 · 21 posts · 6 votes

7y

@Priscilla Swantner - That’s a very creative approach and I appreciate the feedback!! I suppose my main issue is simply networking for money. Even though I’m not “selling” anything and am proposing making them money it’s a foreign concept for me and my circle is quite slim of people who have the type of capital needed.

Our other issue is that we were not expecting to find the amount of deals we have so fast. I too want to build a book of business so to speak w happy lenders who will continue to earn and keep investing. Racing against the duel clock of the deal and the capital!

Good luck to you... you sound like you’re well on your way!

0 Reply

Camille Johnson

OP

Flipper/Rehabber · Lindenhurst, IL · Member since 2019 · 21 posts · 6 votes

7y

@Mark Waldrip - Hi Mark, I would actually love to pick your brain at some point (pun definitely not intended lol) as I’m sure you’re a wealth of knowledge!

To explain a bit further, the model that we have developed is that we are looking for lenders. In exchange, they receive 1. The deed to the property and 2. A promissory note to pay registered with the county.

As I mentioned we also have a renovation company and are very familiar with project management, timeline and costs. My husband and I feel this is where some investors get their final projected number or return off to be honest. We don’t outsource our labor and obviously it’s in our interest to complete quickly and produce a quality product.

We have a software system that we use to help vet/comp deals so our original offer is essentially a “win” for the lender. All funds are kept in escrow and pulled in draws as we complete and document the work assuring the lender’s asset (the property) is always valued more than any money he or she has put in.

We also agree to pay back our lenders within 12 months or less. Truthfully though that’s just to be completely safe. We are able to completely gut to the studs and rebuild in half that time so the lender will have their money back within 6 months (usually) with a healthy return and can reinvest. We never see a dime of their money or get paid until after the sale.

And our agent is involved in that process from the moment we take ownership. Ensuring a speedy sale.

Right now my problem is that I am having many properties in my pipeline. We have created a rock solid system trying to look at the deficits within real estate investing and then solving those issues. Our problem is capital...

We are continuing to grow and learn. My strength is sales/marketing and my husband’s is project management so any advice is very welcome!

0 Reply

Camille Johnson

OP

Flipper/Rehabber · Lindenhurst, IL · Member since 2019 · 21 posts · 6 votes

7y

@Bob Floss II - I have to say, I think you are right! I was raised to kinda keep money out of the discussion and I am not comfortable networking for money and it clearly shows :|

I get so many deals in my pipeline to purchase by networking because I’m comfortable talking about helping people get out of sticky situations with their homes but I need to get over my issue with asking for money.

To be honest, I have never been so direct as I’ve been on this thread so it is giving me some good practice. I do know for sure, I believe in the processes we have in place and the opportunities we have for individuals to earn passively because of our capabilities. I just need to get out and let more people know! Thanks!!

0 Reply

Camille Johnson

OP

Flipper/Rehabber · Lindenhurst, IL · Member since 2019 · 21 posts · 6 votes

7y

@Nathan Shotts Thanks for the feedback... we originally talked about offering 8-10 or up to 12% depending on the amount of money lent to us for a project.

I have looked into hard money however for us, we have several properties that come into the pipeline and want on-going relationships.

Something to consider again maybe...

0 Reply

Shelly F.

Crystal Lake, IL · Member since 2017 · 19 posts · 11 votes

7y

@Camille Johnson I am up in Crystal Lake and just starting out, you are much further along in the process, I guess I want to be just like you when I grow up LOL! Would love to connect at a meet up sometime!!

0 Reply

Shelly F.

Crystal Lake, IL · Member since 2017 · 19 posts · 11 votes

7y

@Priscilla Swantner Would you be interested in sharing your investor presentation? Or giving a generic guideline of what you include?

0 Reply

Camille Johnson

OP

Flipper/Rehabber · Lindenhurst, IL · Member since 2019 · 21 posts · 6 votes

7y

@Shelly Forte We are close! Let’s for sure meet up. I would be happy to help in any way I can. [Contact info removed by moderators] - more of an inspiration page and has lots of pics of our renovations too. :)

1 Reply

Daniel DietzPro Member

Rental Property Investor · Reedsburg, WI · Member since 2011 · 1k+ posts · 857 votes

7y

@Camille Johnson, I would encourage you to 'network until you wear yourself out'!

I would listen to every pocast and read every blog hear on BP that deals with private lenders or private money partners.

When we first looked into this a few years back I took the advice that @Brandon Turner gives over and over.... Tell EVERYONE what you do. And figure out a way that does not sound like you are 'trying to sell them'. It helps that you ALREADY have a track record.

What I did when we started searching is to

1) Come up with a 'sample deal' of how our existing self owned rentals were doing using the BP Rental Calculator.
2) Gather 'referral letters' FROM our existing tenants of how well we take care of our properties and them also topresent to potential partners/lenders.
3) Make a list of EVERYONE I could think of that *might* have funds to invest. Obviously this takes some guesswork but some of my ideas were; relatives, friends, neighbors, former customers ( I am a housing contractor for day job) and the like. Some 'criteria' I considered were; high paying jobs, recent job changes so 401Ks to reinvest, enough net worth to afford a second or third home, retirees who seemed to be living well, people who talk about being fed up with the stock market, etc.....
4) On that list of about 50-60 names I ranked them from 1- 4 of 'who I would like to work with' that had to do with personality mostly and level of assumed financial knowledge. That narrowed it down to about 10 with the best score of 1 (meaning first choice).
Of the first 5 I called or talked to 3 were interested in hearing more. One has made 2 loans to us and brought the downpayment for a 4 plex we jointly own. The second is going to be bringing the down payment on about 8-10 units we are working on purchasing right now. The problem is more finding enough deals to fit the money available :-)
One tip on talking to people when letting them know what you do is phrasing it non directly. What I mean is something like "The rentals are going GREAT. We are actually looking to add more units right now while interest rates are low and demand is high. If you know of anyone (even if it is THEM that you are hoping to attract) let them know we are looking or investing partners right now". If they ask more.... '"it is a great chance to get a completely passive return that should at least equal the stock market over time without the worry of a crash."

[email protected]608-524-4899

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Obtaining Private Money From Actual Private Lenders?!?!

Obtaining Private Money From Actual Private Lenders?!?!

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