Advice on Finding a Private Lender

[Kathryn Nesbit]

Hi! I am new to BiggerPockets and was looking for some advice on private lenders. Specifically, I’m wondering what others’ experiences have been working with private lenders, and how to find one?

For context, I live in Salem, MA and a few years ago my husband and I were looking to buy a house that was not turnkey, but also livable, that we could live in while updating, and rent on weekends (either a room or the entire home) during Salem’s busy Halloween season. The issues we ran into were being pre-approved for a mortgage much lower than what most houses in our area are selling for, and finding houses that were in our price range did not qualify for conventional mortgages. I left my full-time job 6 months ago to be a stay-at-home mom, so we would not qualify for a traditional mortgage at this time, but we’ve recently noticed listings in our area that would be perfect investment opportunities.

A house was just listed this morning for $650,000 that is livable, needs significant cosmetic updates – it looks like it hasn’t been updated since the 90’s, does not look like it needs many, if any, structural updates, and is directly in the Salem downtown area. For perspective, the house directly next to this house is estimated at over $900k fully updated with slightly higher square footage, but 1 less bedroom. My husband and brother both have extensive backgrounds in construction, while I have experience in design, so I am very confident that with the updates we would make, the house could be worth over $900k. This house is also located in the ideal location to be a weekend/short-term rental. It is right in the heart of Salem's downtown and steps from the Historic Salem Common. Salem is considered to be the Halloween capital of the US – we had over 900k people visiting this past October alone. There are not enough hotels and bed and breakfast spaces for all these people, so private bnb rentals (such as Airbnb, Vrbo, etc.) are booming in Salem. Rentals in the same proximity to the commons as this house are renting for between $200 and $1200 per night in the summer, and that significantly increases in October, some as much as $1800 a night. Our plan would be to update the already finished basement of the house and rent it on weekends throughout the year. Because of its proximity to the Common and downtown, it could easily get $200 a night in the off season, and $1,200 during September and October.

Very long winded, but all that is to say, we’ve done a lot of planning and research, and now we’re exploring how to actually set this in motion. Any advice would be much appreciated!