How to find Private Money?

[Jake Baker]

Hey BP,

We do a lot of flips and BRRRRs in Jacksonville FL and San Diego CA. We have a pretty good system right now where we fund with a combination of Hard Money and Private Money.

Hard Money will fund 90% of the purchase price and 100% of the rehab on a draw schedule. Our Private investors will fund the remaining 10% of the purchase price, the first portion of the rehab (to be drawn later from the HML), and the holding costs. Of course, the private lenders usually want equity.

We want to move to exclusively using private money (on a debt loan) and cut out the hard money. We are capable of pooling together a dozen small investments of $10-20k. Ideally, I would prefer just one big loan from an individual or entity. 

What is the best way to raise a ton of private money and not give up equity? 

[AJ Exner]

Quote from @Jake Baker:

Hey BP,

We do a lot of flips and BRRRRs in Jacksonville FL and San Diego CA. We have a pretty good system right now where we fund with a combination of Hard Money and Private Money.

Hard Money will fund 90% of the purchase price and 100% of the rehab on a draw schedule. Our Private investors will fund the remaining 10% of the purchase price, the first portion of the rehab (to be drawn later from the HML), and the holding costs. Of course, the private lenders usually want equity.

We want to move to exclusively using private money (on a debt loan) and cut out the hard money. We are capable of pooling together a dozen small investments of $10-20k. Ideally, I would prefer just one big loan from an individual or entity. 

What is the best way to raise a ton of private money and not give up equity? 

Hey Jake,

In my experience, it relies REALLY heavily on networking and referrals. If they don't know you, there is usually a lot of hesitation towards heavily leveraging the purchase and rehab of a home to someone that they don't know well.

This is a good start (posting and being active on BP), but checking in with local REI groups and reaching out locally won't hurt either. I've found that people who have been doing REI for a while might look into doing something like this because it leverages their experience of recognizing a deal without having to be "in" it and doing it anymore.

Good luck!