Advice for Private Money Lender Relationship For First Deal

[Brian Tran]

Hello,

I am working towards my first rental property and I found a local PML at a REIA meeting. They are nice people but I don't have a close relation with them. They are happy to lend to me but require that I send my deals to them for their approval. This is problematic because after I conduct my analysis, it takes some time to get the approval and by the time I do and send an offer, the property has already been sold. It's also understandable considering i'm a newbie not to stumble on a bad deal.

My realtor also said that many house selling agents are less likely to look at the offer without a proof of funds. I asked my PML and they are reluctant to do so, saying they don't need to do that to put in an offer. This is my first established relationship with my realtor and PML. I want to make this work. I thought it would be best to have everyone get together for coffee and discuss a game plan such as times of the day i'll send my analysis and to make them understand why my realtor's asking for POF.

Have any other investors had this problem? How else would you handle this?

[Joseph Lopez]

Good question Brian, and I'm optimistic that you will get a lot of answers that will assist you. I'm a seasoned investor and when buying homes under $100k, I just dont get asked for POF anymore. But its because of the established relationships and reputation. So there's the pickle...how do you go from where you are to where you want to be? I suggest that you look into a PRO membership with BP. One of the benefits is that you can print/download/email practical calculators to showcase to PML, potential investors, and the realtors you are working with. Dont underestimate that power of paperwork. If I was meeting you in person and I knew you were a newbie when you start off by saying "I have this house....." you might lose me there..... BUT if you started off by saying " i'm interested in buying this property to fix and flip it and after analyzing the deal it pencils out. Would you mind reviewing my numbers and share with me your thoughts?"....then hand me the paperwork you prepared on BP....trust me you will get my attention, you will get my advice, and If its a good deal I will probably ask you "do you want me to invest with you?". Its a whole different platform when you present it that way.

The other thing you will want to get situated it POF. If you have the cash its not an issue, if you dont have the cash, simply partner up with someone that can produce it. In the beginning I would ask an investor to partner with me and offer them a small percentage of the profits. In return I would get to showcase their bank statement and normally that worked. When I got a little smarter and some experience I formed an LLC and the investor(s) and I parked our money in there. Then I would produce POF from the LLC and nobody questioned "how much of that money is yours?". It could have been 10 cents of the $250,000 and it was not important. In all sincerity, I believe there is a box marked POF and they simply mark it off once they find out there is money on the table.

Hope this helps!