Your investment is backed by a Deed of Trust, which gives you the right to take the property in the event of default. You can put your money to work and enjoy passive income without any stress. Real Estate investing involves risk. All parties are advised to consult with their attorneys, accountants and financial advisors before entering into any type of investment. There can be no assurance that the investment objectives described herein will be achieved.
Past performance is no guarantee of future performance or that such investment opportunities will become available.
The information is intended only for discussion purposes and should not be relied upon in evaluating the merits of investing in any investment or security. Potential investors who express an interest in investing will be provided with detailed information and other documents. Private Money Lending. Lender Testimonials. What portions do your record? How to you steer clear of the SEC if your investors are not accredited?
What about investors from different states? Do you use an attorney? What does it cost, per deal, to set up the lending package and close? How are profits divvied up? Margaret, the smaller investors are usually utilized for 2nd position rehab monies. So it looks very much like the 1st position, only in 2nd. So deed of trust, promissory note are both recorded at county. Anson, This was the best information on private money I have read.
After reading some of the posts a lot of my questions were answered. Thank you for the information! Also is there an example on here of power points and track record sheets that you give potential investors? Or should I write up a full business plan? Hard to say, since each and every private money lender is different.
I would say 9 houses is plenty of track record to ask for straight interest rate vs. Having your track record broken down in your business plan couldnt hurt at all, that way the lender can see that you know your numbers inside and out on the 9 you have done, and will feel more comfortable working with you. Good luck out there!! Good article, Anson. Thanks for sharing. The one thing I am finding lacking with articles about raising private money are the actual mechanics of the deal…for example, do you start an LLC and form a JV for each deal, and who pays for the associated costs including drafting the legal documents like the note …and how do you handle closing?
I have a million other questions, but the actual steps you use when completing a deal would be tremendously more helpful than the cursory overview you have provided here. There are a million ways to structure it, and it will depend on what you and your lender want to do. Mine, we do a standard deed of trust and promissory note, the payment is negotiable, the rate is negotiable, the profit split is negotiable, the points are negotiable. So therefore, the reason there isnt a play by play of how these are structures, is because everyone does it differently!
Hi Brandon- You are so right, the devil is in the details, and it is rare that anyone give you a peek at their lending package. I would suggest you spend some time with both lenders and borrowers in your local real estate clubs you may have several in your general vicinity, and it is good to join ALL of them, esp while you are networking to find out who is who and what they are doing! Ask each of them at some point very nicely, of course!
As a lender, I use a mortgage and note to secure my first position in the public record, and if there is a profit sharing component, I also have a Participation Loan Agreement, or something of that nature, that takes precedence. I will say that a lender should have their own docs, make the changes that pertain to your individual deal, and have you review it for negotiation. However, if you are dealing with a newbie lender, you two might want to sculpt the deal together and share in the doc creation and closing costs.
If you are both working toward a deal that is fair and equitable to both sides, with good faith among all, you should have the foundation of a long term investment partnership. Good luck! I am a buy and hold investor. I will deifinitely try a few of the strategies and also develop a short presntation in the hopes of getting long-term private funding. There are for sure. A BRRRR looks like the front stages of a flip, except instead of selling to an end buyer, you refi out.
There are even lenders who do a hard money loan up front, then the refi 6 months later for this type of deal. Its all about finding the right person, who knows their money will be tied up for 6 months until you can get the conventional refi in place and buy out the private money loan! My biggest challenge in finding properties is going through realtors who want you to sign with them exclusively and who want to verify your finances before the finances have been obtained — have you had this as an issue?
For the last 3 or so years, all of my deals have come from off market sources. Its a hard piece to learn and implement, off market deal sourcing. Not impossible, though. When approaching lenders, they are either sold on you, the opportunity or your track record. Or a combination of those things. Going in with zero track record, you better have a winning personality and some good opportunities that a lender would jump at. Its the nature of the private money game, track record usually wins, but isnt the end all-be all. Hi Anson, Great post, Useful for all real estate investors.
Most states have lenders listed as public record. Some closed record states dont, and that makes things a bit more difficult! Great post. As a lender, I give out about 10 cards each time I attend and may receive one followup. Ask at the REIA meeting who the lenders are, talk to them and follow up. I am much more likely to remember the prospective borrower if they email the next day or that night than three weeks later.
Show drive, passion and dedication. Take the time and craft the letter. Absolutely on all points. Cold call and mailing them works, if we can work it out, its perfect for us since they usually arent lending to 10 other investors…. Very interesting. These are the lenders I am interested in conducting lending with. However, if there off the grid how would I find them to make a direct connection? For any of the lenders reading…how do you lend for buy and hold investors? I get that an agreed split can be worked out for a property that is being flipped, but what about buy and hold…do you just work out payment terms?
The other larger, private lenders in my area are also short term lenders. So far I have not been approached with a long term or equity deal that entices. I am a new investor looking for my first multi-family deal.
As such, it seems my only real option is to get started with hard money. Hard money, or family private money seems like a good option. Also, maybe a partnership where you give up more of the pie but get in with less money down or in the deal. Do you have templates, models or spreadsheets you work off of?
Checklists of information you typically include? You throw some hints at info you present with the questions at the end of the quote, but what specifically do you focus on beyond presumably IRR, COC when it comes time for the hard sell? Resources include any kind of investment calculator, and prettying up the output with nice infographics and a good presentation. Nothing too fancy, there are usually numbers and a handful of terms.
Great article! This is definitely a skill people need to learn if they want to do well at real estate. Hi Anson, great post. Thank you.
I'm Interested In Austin Fernal says:. Then, you will learn how to present your opportunity to a group of prospects, and finally, how to qualify the prospects to make sure you have a quality private lender able to loan money. Here are a few questions to prepare for when looking for private real estate loans: Will they get their money back? How do I make sure I am not taken advantage of, what are the dangers of this, what kind of contract do I need? Connecticut Private Money Loans.
Hello Hanson. Great Article. I am an OPM advocate and would like to know if you have any lenders who will consider deals in Atlanta, Georgia Baton-rouge, Louisiana. I also have in qualified in-buyers with POF funds. I also have a few good deals here in South Africa, and I am looking for funding. This post really gave me some insights. Starting with the original post by Anson, all the comments have complemented an excellent discussion for this topic. Different angles of the same bussiness have enriched our knowledge and have opened our eyes and broaden our view. Finding a hard money lender or larger investor can be very difficult.
I spent over 6 months running from one bank to another, none could help me. I was exhausted and before a local loan officer referred me to a hard lender; he only does this when the deal is solid. In my case, at 28, two yrs work experience, I decided I could make it in real estate development than doing my professional job; felt I was doing alot and not rewarding enough, though pay was 6-figure.
I had solid development plan, superb resume, excellent credit and recent closed development deal. My first and recent development also played a key role, where I designed and built a half a million dollar mountain home that sold few days in construction; the design was custom and attracted lots of interest from millionaires looking for buy a mountain vacation home. All of these, coupled with my local bank officer and a broker working with my development group, made me seem very legit despite uncapitalized.
Long story short, two hard lenders were prepared to fund my project for 2million commercial retail strip center including land. The project will worth 5 million plus upon completion. It sold for 5. He was happy and wanted more. I have over 20 years of Maintenance experience in the multi-family industry and almost 5 years of Facilities Management experience.
My partner has degrees in Business Management and I. Thank you Anson for the article. I currently gaining knowledge in the house flipping business, and doing the research and this article really helps. Any other advice you have would be appreciated. Thanks again for the article. Thanks for this great article Anson! Very informative. I am an investor in MO and currently looking for partners to fund our Real Estate deals. Looking forward to more articles like this! Thank You. Indeed article is on point…. I am 3 months in my REI journey… here is what I think…..
Real Estate Investing: How to Find Private Money Lenders - Kindle edition by William Johnson. Download it once and read it on your Kindle device, PC, phones. How To Find Private Money Lenders For Your Real Estate Investing Deals: A Step-by-Step Automated Online System That Builds A Huge List Of Ready To Go .
Network with other investors… who are not just lenders……. Thanks for this very informative and motivating article, Anson. I appreciate you sharing your hard earned knowledge and experience. Thanks for the information. It was very informative. I am a new investor in the Memphis, TN area and I would like to get connected with some lenders who are willing to loan 0n deals with new investors in my area.
Thanks and hope to be doing business with you. Anson, Nice article. Very helpful for rehabbers and newbies. Although we are in primarily in the commercial arena I found especially helpful were the comments you were able to elicit from your readers. ROI, preferred returns, time to payment, lien position, amount of up front financing, legal entities, investors vs. VC firms, etc. It took a while and multiple discussions with individuals from different disciplines. Thank you so much for posting this article. I have a couple of small private money lenders that I can use from time to time but nothing like other investors in my area.
Your article gave me some great ideas and the confidence to try those ideas out that you wrote about in your article. I also did not read all of the comments, because there are a lot. Notify me of follow-up comments by email. Notify me of new posts by email. The 2 question I typically get from people I meet is this:. Free eBook from BiggerPockets! Click Here to Download the eBook Now! June 18, June 14, 0. June 12, Randy Phillips on August 13, pm.
Rando Reply Report comment. Anson Young on August 14, am. Reply Report comment. Ekyn Chen on June 8, pm. Anson Young on September 26, am. Jamane Y. You are most welcome! Paul Winka on August 13, pm. Paul Winka on August 21, am. Kim Nauling on August 14, pm. Greg Goldsmith on August 14, pm. Anson Young on August 15, pm. Gloria Dulan-Wilson on January 19, pm. Todd Goedeke on June 9, am. How would you like to have available a world of additional lenders to co-invest in bigger deals?
What is best way to contact you? BB Liu on June 23, am. There is no second lien, Rehabber defaults on the loan and Lending LLC brings in action in court to foreclose on the property. Please tell me if I am misunderstanding something. I really appreciate this. Thank you!
Reginald Washington on November 14, am. Donese on August 6, am. Noble McKenzie on August 10, am. I am in texas Reply Report comment. Ekyn Chen on January 31, am. Gordon D. Nesta Dawkins on May 15, am. Would Love to connect with you on a flip or two in Atlanta Georgia sometime. Kanita Memic on September 10, am. Hello Margaret, can you please contact me? Bruce Silverman on August 14, pm. Just wondering if you have any tidbits for us all, as several people are reaching out to me from other states… Reply Report comment.
Margaret, Very good questions. How do I get in touch with you? Jason T Rabon on May 7, pm.
Hi Bruce, are you still lending? Darryl Bass on February 5, am. Can you send me your contact info? Brandon Turner on August 14, pm. Nice work, sir. Thats a great complement, sir! Anson, How do I get in contact with you? Are you looking for more lenders? Anson Young on June 14, pm. Todd, you can send me a message on biggerpockets. Ben Raygor on August 15, pm. The interview you heard about the retiring police officer gathering his colleagues and convincing them to invest in him was BP podcast episode 3 Reply Report comment.
Anson Young on September 2, pm. Peter S. I would love to know that too! Thanks, in advance…. Paul Eller on November 13, pm. Any luck finding investors? I need wrk on a token house. Paul Reply Report comment. Jim Galart on September 3, pm. Anson Young on September 13, am. Thank you Jim! I appreciate you taking the time to read and comment! Good luck out there!
Amanda Flowers on September 12, pm. Brandon Sturgill on September 18, pm. Anson Young on September 19, pm. Brandon Sturgill on September 21, am. Thanks for the follow-up, Anson! Ray Morris Jr. Anson Young on July 8, am. Awesome Ray! Thats a great way to do it, educate then present opportunities! Gloria, For the last 3 or so years, all of my deals have come from off market sources.