How To Approach A Potential Private Lender.

[Alexander Ransom]

hey everyone, my partner and I found a good deal but are currently in the process of closing on another property. With this other property we are thin on money for other investments. We do however have a couple people in mind that we think might be interested in private lending. My question to you all is do you have any good strategies when approaching a potential private lender? What has worked for you? We want to be professional and try not to make it sound like we are simply asking for money, but rather offering an opportunity to the lender. Any helps / tips would be appreciated! Thanks in advance.

[Rick Stein]

Prepare a comprehensive Proforma. Include not only financial data about the property, but include community information that shows the area to be solid. Have a written estimate for the rehab. Include comps that show you LTV will be no more than say, 65%. In other words, show the prospective lender that you know what you are doing. I never ask anyone to lend me money. The word lending has a negative connotation of possible loss. But, people do like to "invest". Therefore, I ask them if they would like to invest in my project. I present it as a mutually beneficial business dealing in which we both win. By the way, I have many owner financed and privately finance properties in my portfolio. I own three family with owner financing at 2% (the previous owner really wanted out!) and several between 5-6%.

Good luck!