Investor from Albuquerque, New Mexico

[Jeremy Garcia]

Hello all! 

I wanted to get input on how people have purchased their 3rd, 4th, 5th...nth rentals? 

I really want to start using other people's  money since we have used our savings to fund our first two rentals. I want to use private money before hard money but I guess I just have cold feet to reach out to family and friends through indirect conversation about my real estate investing.  I would like to hear how others went about getting private money from family and friends.  

Based on all the forums,  podcasts, and books that I have read it seems to me that I just need to create a contract between myself and the private money lender (with the input of a lawyer) and have the lender help me with the down payment/fixing costs... then I provide all the subcontracting/sweat equity.  It sounds simple but I have never done this...so maybe I need to JUST DO IT!!! :) 

I just recently used the"borrow from your IRA" strategy and it worked great. I used money from my Thrift Savings Account to fix my latest rental. The only thing I did not like about borrowing from my TSP is having to go several months with a smaller than normal paycheck, since I have the loan payment taken straight out of my paycheck and I try to pay the loans off quick.

Can you all provide the following breakdown for me regarding your private money negotiations:

1) Who did you borrow from?  Family Member or friend

2) What was loan for? Rehab costs, down payment,  etc.?

3) How did you go about getting a contract done between you and the private money lender?

3)  Expected outcome of both parties involved in the deal? 

4) Overall satisfaction with private money investment strategy? 

5) Ideas on how to best gain the confidence of a prospective private money lender?

Thanks! 

Jeremy