Looking for Private Lending. How could I find one?

Question

Morning BP, currently under contract for two properties, for one bundle price. Price is under market and has great ARV, due to the area. I have attempted to reach hard money lenders, but all require inspections, appraisals, or some "proof of existence" which I totally comprehend. However, this deal was structured as a "cash offer" and with No Contingencies. Which has put me with limited options for funding. My only option now appears to be to find a private lender that is willing to work with me and receive a good Return on their Cash. Yet, even then it's been extremely difficult to even get in touch with a possible individual in the area I am located. Where should I look for private lenders? Posting, "Hey guys, I'm looking for a private lender with these numbers ..." doesn't really attract anyone. Cause even I wouldn't be interested (if I had the capital).

What do you guys think? Thank you all.

PP: 160k | Reno: 100k | ARV: 320-340k (for both)

What do you guys think? Thank you all.

PP: 160k | Reno: 100k | ARV: 320-340k (for both)

Damaso Bautista · Answer

@Jesus Sosa

If your contract is assignable and it is a great deal, then you might be better off trying to wholesale it.  At least you will make some money off of it.

If is it not assignable I guess you will have learned a good lesson and the seller will have also.

Good luck!

Jeff S. · Answer

You made a non-contingent offer on a property that’s occupied, you can’t get into it, and you can’t do an inspection? Yet you say the price is “under market and has a great ARV due to the market.”  What’s it’s worth due to its condition (i.e. the AR in ARV)?  That is, @Jesus Sosa, how exactly do you know what the property is worth now if you can’t get professionals inside to estimate the repairs and have not indicated you can do this yourself?

You should keep looking, but if no hard money lender will touch this without protecting themself with an appraisal, or another verifiable
method of estimating value, why would anyone think it fair to ask someone inexperienced at this to loan you money?  YouTube videos and alliterative catch phrases won’t make this deal any safer for them.

Sorry Jesus, but if you can’t find a professional lender willing to fund this deal using a sensible valuation that includes verifiable repairs, you shouldn’t be "dialing-for-dollars" asking your friends and relatives.

And no, a private money loan, is still a loan.

Account Closed · Answer

Private Money is technically cash - having a contingency definitely protects your real estate investment; I've seen plenty of inspections that have unveiled major property issues that the realtor and or seller did not disclose and were ultimately deal breakers and costing investor a loss vs a gain.

Allan Smith · Answer

You need a LOCAL hml. If they need an appraisal, they aren't the local guy to talk. Keep talking to more hmls.

once you have the deal purchased, start using social media to show what you are doing. That's most likely where your first private lender will come from. Also, just tell everyone you meet (briefly) what you do. Mention you help the average person achieve above average returns, and if they ask questions go from there.

Shiloh Lundahl · Answer

@Jesus Sosa this post reminds me of the saying, “Your net worth is equal to your network.”

How many investors in your area do you know?

If you got into a jam, could you call 5 or 6 different investors that you know personally to ask for their advice? If the answer is no, then your network is too small. BP is a great place to learn the basics of real

estate investing and to get motivated, but it doesn’t, or shouldn’t, replace the benefits that one-on-one interactions that developing good relationships with investors in your area bring.

I would encourage you to reach out to investors in your area and offer to buy them lunch in order to start networking with them. At lunch you could ask them who they use for funding their purchases or acquisitions. That is a great way to build a list of hard money lenders.

Private money lenders are going to be different though. I made a YouTube video specifically about how to find private money lenders that goes in depth about this topic because so many newer investors ask this same question. Private money lenders are usually people that you know such as family or friends or people that see what you are doing in real estate and they want to be a part of it so they are willing to lend you money in order to learn about

Michael Glist · Answer

I would say to look into a bridge loan. Also do a little more looking for local hard money lenders. The ones that lend nationally are going to require an appraisal, but most that only focus on 1 state or even just a few states may not require an appraisal.

Erik W. · Answer

Point of clarification: you are under contract with an "all cash" offer, and you don't have the funds in place to close this deal, nor any prospects of finding the funds?

If that is the case, my friend, you have put the cart in front of the horse.  That's the polite way of saying it.  The non-polite way to say it is you lied to the Seller.  I'm amazed they signed a contract without proof of funds.  Someone's agent dropped the ball, or this is a private sale without agents.

Regardless....

Private money usually comes from relationships: people who know you.  My first three deals with private money went like this: 1) uncle and aunt 2) same 3) same + added my parents.  All three deals paid off, as promised, and they got their investment back plus good interest rates.

Since then I have looked again to private money in the form of equity partnerships.  Not just borrowing, but getting fellow investors to bring in cash and get a slice of equity and quarterly profit sharing from rents in excess of operating costs.  This is a great technique that I believe has many advantages over traditional debt mortgages which I won't go into here.  But ultimately, it's a more advanced strategy that may not work for you yet.

I'd be calling everyone I know and talking about what I was doing and asking if they know anyone who'd be interested, attending local REIA meet-ups, posting ads on FB, and passing out business cards at trade shows.  If you default on this contract and the word gets around, no one will want to do business with someone who fails to close the deal.  Real Estate is a reputation-based business.  Once you establish a track record of performance, it will become much easier to find money via references.

Don't let this deal crash and burn, even if all you lose out is a pittance of earnest money.  You're new full-time job is dialing for dollars.

Jesus Sosa · Answer

@Michael Glist

Properties are occupied, this is limiting my ability to take inspectors/contractors in to get rehab estimates.

I have not done any bridge loan. But I will certainly look Into that. Thank you!

Michael Glist · Answer

Are the properties occupied? If not you can just say you are looking to take another look and bring in your contractors or inspector to get a hear start on everything prior to closing.

Your other option may be to look into a bridge loan to see if that would be a short term option available to acquire the property and then look into a hard money loan or other financing depending on what you are doing with the property.

Looking for Private Lending. How could I find one?

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