To find deals I assume off market are the best, correct me if there are others? but once a deal is found and you don’t have the down payment, how does someone obtain Hard Money or Private Money?
Investor · Ellwood City, PA · Member since 2019 · 93 posts · 124 votes
4y
Ther are about 1,000 decent HMLs nationwide. Most stick to lending locally, some are nationwide, and all have different terms. They're not hiding, but be VERY careful, there are plenty of scammers, too.
When you do find a HML prepared to lend in your market...
Check if they need a licence in that state.
Do NOT pay upfront fees direct.
If the deal sounds too good to be true, it is!
Look for little red flags... touting for business on FB, using a gmail, no company website, ridiculously good loan terms, agreeing to lend almost instantly, sketchy communication.
Get some references.
Ideally ask for a word of mouth referral to lenders while you're networking with realtors, title companies, wholesalers, other investors, attroneys and contractors. Many of these folk will know HMLs and PMLs.
Then, on to private money...
Again, make yourself known, network, be present, add value for others. Join groups, particupate in the conversation. Eventually, the private money will find you. In my experience, you don't go hunting for it, you attract it by being the guy or gal they want to lend to.
See if you can find a local investor to partner with in some way to add value for them, and get plugged into their network. Make a name for yourself as a decent person who does what they say and has some experience.
Asset based lending can be somewhat of a misnomer, because while the asset is the backstop for the lender, a good borrower and save a bad project just as a bad borrower can ruin a good project, and lenders know this. Of the the Ps (people, paperwork and property) they put peole first. Of course everything else has to line up too, but its definitely people first for the lenders I know.