All Forum Posts by: Salvatore Lentini

@Chad Olsen WF said that?  They say a lot of things.  In my experience, on the borrowing side and selling side (to buyers of my flips trying to qualify for a mortgage) they frequently do not come through.  I know realtors that warn their sellers about accepting offers with WF pre-approvals.

A private lender at 5%? Unless they are getting equity and making money on the back end that is extremely low.  Are you doing anything to reduce current expenses? Any improvements that can be made to increase rents?

Hi Terrance-  I've found it's much more difficult to find private lenders with which you have no prior relationship.  Reach out to family, friends, co workers, people you see regularly etc.  Of the 17 private lenders that have invested in my company in the past few years.... all 17 of them are people that had familiarity with me or were referred by someone that had a relationship with me (realtor, lawyer, insurance agent, bank teller, plumber, friends, relatives, friend of my realtor, friend of my lawyer etc).  You'd be surprised at who is looking to invest money.  And people like to invest with people they know rather than strangers.  Trust and integrity go a long way in this business.

The big x factors that you are most likely underestimating (because EVERYONE does) is how long it will take and/or how much it will cost.  It WILL take longer and cost more than the numbers on your spreadsheet right now.  I am rehabbing a 15 unit right now and when I first bought it my initial thought was to get everyone out so I could rehab at will and not have to worry about noise, trucks, complaints, vehicles in the way etc.  I'm so glad I didn't do that.  Having that revenue coming in has helped immensely and dealing with the tenants has mostly been positive.  I've learned a lot more about the history of the building, figured out which tenants' leases I want to renew and I've gotten some real time feedback from the demographic that my tenant pool is coming from.  It was at 91% when I bought it and now due to evictions and some tenants leases ending and the different units I am rehabbing I am only at 41% capacity and it definitely eats up capital quickly.  Looking forward to getting a few of these units finished in the next couple weeks!

There are a bunch of companies out there but I prefer ListSource.  Just Google "direct mailing list"

Good luck.

Sal

On the flip side of being offended...  Some of the best private lender relationships I have started with the question, "How many rentals do you have?"  I think real estate is interesting and mysterious to people because a lot of them wish they could take the leap or regret not having done it in the past.  They see the shows, they hear about real estate moguls and now they have an actual, live real estate investor in front of them.  They're curious :)

You can borrow from a hard money lender, get private money from someone you know or by networking, partner up with someone that has money (you do the work they supply the $), have the owner do seller financing or partial, or subject to, or lease option....

What are you looking to do?  Is this a flip or a rental?  Single or multi?

Great point Anton.  There are always "layers" in investing and each layer comes with a time cost and/or a $ cost.  For instance, I have purchased properties from wholesalers.  The wholesaler gets  X thousands of dollars from me.  Could I avoid wholesalers and find all of my deals myself?  Sure.  Would it take up more of my time to do the marketing necessary to find the number of deals I need/want per year?  Yes.  I feel my time is better spent vetting deals and working on adding value to the properties I own.  Is it more expensive to eat out than to eat at home?  You're paying to not have to cook or clean.  Pretty much all aspects of life have a pro vs con, risk vs reward, convenience vs money and time component to them.  If finding a large apartment/commercial deal to invest in yourself is what you want to do, great.  But just realize if you want to find a good deal, it will definitely require time (RE education, networking, talking to sellers, talking to commercial brokers, talking to commercial lenders, viewing properties, analyzing the numbers, projections, negotiations, paperwork, inspections etc).  Not trying to discourage you just make sure you go into it with the right expectations on time commitment.  The equivalent would be someone on BP thinking they could take $2 million and buy a tech company....and make money without any time commitment. (besides @Levi T.).  There are different "layers" or "levels" to RE investing and you need to find which is right for you.

Hi Dan F - The best way, in my opinion, to find private lenders is through networking.  After 20 years in the business surely you must know a lot of people.  Let it be known that you're looking for investors.  I'm constantly surprised by the people and the situations in which I come across private lenders (bank teller, realtor, friend of realtor, lawyer, brother, cousin, cashier's aunt etc).  You never know who is looking to lend and earn a much better rate than a savings account.  With the stock market as volatile as it is now, private lending just became much more attractive. 

Glad to be of help Jerry.  Keep asking questions on BP.  Networking and seeking advice from those who are walking the walk will significantly accelerate your path on the RE learning curve.