How difficult is it to find private money in 2020?

22 Replies

Money should be fairly easy to find in 2020 it's the deals that are tough to source.

Private money refers to family, friends, associates, etc. You need to reach out to everyone within your circle.

Hi Frederick,

if you don’t mind me asking what are you thinking of doing with the cash and how much do you need?

I think there are many investors on bigger pockets that would be happy to offer capital for the right deals.

Best of luck in all your endeavors.  

@Frederick Parrott private money is very abundant right now especially if you are a pro and have a good presence in your market. You can find lenders inline through Facebook REI groups in your area, REI meetups, other investors / cash buyers which you can search for, title companies, RE attorneys and mortgage brokers often know who the pric=vate lenders are.

Depends what exactly you're seeking. If you're seeking companies, Google is your friend. If you're seeking an individual investor, places like Bigger Pockets are best.

@Frederick Parrott do you have a solid track record? If not, I’d encourage you to use your own money until you have a solid track record. Money follows success. If you want to attract money, it will be much easier to do so by showing someone that you are a good investment based on your track record. 

I give the following example, not to brag but to illustrate. Last month we bough 710k worth of real estate with about 15k of our own money. 570k came from hard money lenders and 135k came from private money lender. I was able to raise that money in a couple of emails and phone calls from my network of hard money and private money lenders that I have build rapport with over a few years by showing them they I do what I say I'm going to do and they get paid back before I ever get paid. That's how you attract private money lenders.

@Frederick Parrott like I said, start with your own money. That’s a great place to start. 

You can probably work with a hard money lender to pay for the bulk of the purchase and maybe even some of the rehab, but use your own money for the rest at the beginning.

I agree with alot of what was said above - money is pretty easy to find.  Local investors/meetups are great resources for getting leads on investors - and finding what the local market is charging as well.  I work with and represent alot of private/hard money lenders, and unfortunately i am seeing more and more stories of people who have given supposed "lenders" application/lock fees anywhere from 5-15k and the "lender" simply walked away with their money.  There are alot of scams going on right now it seems, so make sure you do your due diligence on any lender to make sure they have a track record and are 100% legit.   Best of Luck!!

Originally posted by @Shiloh Lundahl :

@Frederick Parrott do you have a solid track record? If not, I’d encourage you to use your own money until you have a solid track record. Money follows success. If you want to attract money, it will be much easier to do so by showing someone that you are a good investment based on your track record. 

I give the following example, not to brag but to illustrate. Last month we bough 710k worth of real estate with about 15k of our own money. 570k came from hard money lenders and 135k came from private money lender. I was able to raise that money in a couple of emails and phone calls from my network of hard money and private money lenders that I have build rapport with over a few years by showing them they I do what I say I’m going to do and they get paid back before I ever get paid. That’s how you attract private money lenders.

 Totally agree with Shiloh.

Once you establish a track record, private investors is easy to find. In networking here on BP, we lined up over $13 MILLION in private capital.

When I started and didn't have a track record yet, I learned how to acquire properties with little to $0 down. I also saved up some money by working three jobs. It was hard but I'm glad I used my own money instead of raising capital too early because I made a lot of mistakes - including losing everything. Good thing I never lost someone else's money.

When I lost everything, I re-started my real estate investing career by calling everyone I know and offered to help them invest in real estate. I got my real estate license and found deals for other people. I managed the construction and did the property management for them as well. I got paid fees and commissions and learned a lot. Once I developed a system and the process was repeatable, that's when I decided to tell others what I was doing.

Through networking and teaching others what I do, I was able to attract my first private lender.

Hope that helps.

@Frederick Parrott , I will start by saying, I have to agree with our fellow BP colleagues above, that in today's market there is money to be found EVERY where it's just how bad do you want to put in the hard work, time and grit to find it.  I am going to sound like a broken record here but, if you find a GOOD deal the money will come.  However, with that said, who are you, what have you done and have you proven that your concept (your business) works.  If you do that people will seek you out with money.

Before I started my REI venture, I made sure to not only educate myself on my particular interest in RE but more importantly get my finances situated so that I could focus on RE and not my finances. I wanted to make sure that before I ever risked anybody else's money I knew that my business had to work with my own money first (proof of concept, track record). If you take the steps to putting yourself into position to be successful before you begin this journey you are more likely to become successful and stick with it thus capturing the eye of people around you that might be potential money investors.

If you don't mind me sharing, this is what happened to me. I began by taking a HELOC out on my primary residence. This got me started. Knowing that my money would have to lead the way before someone else's money would be considered. So 4, now 5 (getting started on) projects later I had my last two investments purchased through OPM. These investors found me through my years of grit, grind and telling EVERYONE what I do. So as hard as it is and will continue to be you have to lead with your money first to establish the track record of either finding deals or doing deals with your own money first and in time the money will find you. Thanks for allowing me to share and here is wishing you nothing but the best in your REI ventures to come.

Money is not hard to find, deals are the difficult part right now. Private money is just that, private. My private money network is approaching $20M. It started with family and friends, then moved along to business associates and contacts, Facebook presence, website presence, BiggerPockets presence, attending real estate events, telling everyone what I do and what I offer, etc. It does not happen overnight but in time with enough effort and deals to back them, not hard to get.