What are some tips on finding private money for flips?

[Josh Benitez]

I know there are hard money lenders out there that will essentially lend you money based on the deal and not on your credit but from what I hear it can takes months to secure capital via hard money lenders. Is there a way to connect with private money lenders on BP? What are some other sources?

[Jeff S.]

I'm not a fan of meeting strangers online to obtain money, @Josh Benitez. Not to say this doesn't happen all the time, but you truly have no idea with whom you are dealing. This is especially true with someone like you, who is new to real estate, and probably doesn't know what to look for and how to protect yourself. (Though you do indicate you have a financing background in your profile??)

For example, most lenders will eventually ask you to fill out a 1003 mortgage application, or similar document, requesting such personal credit information as your SSN and date of birth. This goes a long way to stealing your identity. Would you normally send this to someone you never met because they post on a website and maybe seemed personable? Do you now how to check a lender out? My advice it to borrow as locally as you can for a number of reasons.

First, there is nothing better than meeting someone for lunch, at his or her office, or even standing at a real estate club to get to know them. You'll learn their lending criteria, what they look for, the help they might be able to provide, and you'll be able to sense their character. They will look at you the same way. This is truly a business that based on relationships so take advantage of that. It's also much easier to obtain local references on these individuals.

Second, local lenders will understand your area and can help with purchase decisions beyond just the financials. They will know the neighborhoods including cities to stay away from (or embrace), trends, and local issues. If a local lender explains why a particular deal is bad (or good) you don't have to follow, but you should always pay attention.

Third, they will understand the prevailing lending rates and terms and they don't have to price associated risks of the unknown into their loans as an out of state lender might. This is not to say local lenders will always be more cost competitive, though.

Also, no one should take months to close. To the contrary, most private/hard money lenders (i.e. non-institutional lenders) can usually close in a few days to a few weeks.  It's one advantage of using them.

The easiest way to meet local lenders is to attend some of the real estate clubs in your area. Here's a list from Meetup.com.

Since someone will post it anyway, here's the HML list from BP.

Good luck, Josh.