Looking for advise on finding private lenders

[Dan Grove]

Hi friends,

I'm starting to build a portfolio of long term rentals using creative finance.  I hope to use private capital to fund the entry fees in second position.  Does anyone have any advice on the best way to find these lenders?

Thanks

Dan

[Nicholas L.]

@Dan Grove

yes, go to meetups (real estate or business) and meet people in person and build a network

but... no offense... i don't think funding an entry fee in second position is a particularly compelling investment

[John Jacobs]

@Nicholas L.

@Dan Grove

As a private money lender I agree with Nicholas' sentiment.

[Robin Simon]

Quote from @Dan Grove:

Hi friends,

I'm starting to build a portfolio of long term rentals using creative finance.  I hope to use private capital to fund the entry fees in second position.  Does anyone have any advice on the best way to find these lenders?

Thanks

Dan

 What do you mean by "entry fees"?

[Dan Grove]

Some combination of cash to seller, closing costs, repairs, construction, paying off arrears, assignment fees, commissions.  

[Erik Estrada]

Quote from @Dan Grove:

Some combination of cash to seller, closing costs, repairs, construction, paying off arrears, assignment fees, commissions.  

I mean at that point why not just use a HELOC to finance closing costs? Private lender will be close to a credit card interest rate for them to finance something like that. Or just borrow from a friend.

[Dalton O'Donnell]

Quote from @Erik Estrada:

Quote from @Dan Grove:

Some combination of cash to seller, closing costs, repairs, construction, paying off arrears, assignment fees, commissions.  

I mean at that point why not just use a HELOC to finance closing costs? Private lender will be close to a credit card interest rate for them to finance something like that. Or just borrow from a friend.

 I agree with Erik, although their are some investors out there that will help fund the down payment/entry fees that you mention, they typically are friends and family that trust you and believe in you. I have a buddy that has been doing flips for a few years and he now has investors approach him asking to get in on his flips so he lets them cover the down payment/entry fee's for 30% return on their money. But that is because he has a proven track record and people trust he knows what he's doing because he has done it so many times. 

Starting out, I would try to take equity from your primary/another property using a HELOC, borrower against a 401k/retirement account, or partner with someone that has cash.

[Dan Grove]

Quote from @Erik Estrada:

Quote from @Dan Grove:

Some combination of cash to seller, closing costs, repairs, construction, paying off arrears, assignment fees, commissions.  

I mean at that point why not just use a HELOC to finance closing costs? Private lender will be close to a credit card interest rate for them to finance something like that. Or just borrow from a friend.

 I have used my equity and am now up to 9 doors using PMLs and PMPs for the entry on 3 of them.  I was looking to see if anyone had any other creative ways to connect with lenders for these kinds of loans. 

[Patrick Roberts]

Are these sub-to deals? That's typically where I see people referring to entry fees. If so, I would be very clear and upfront about that when you're networking with private lenders.

[Jacob Sherman]

1st position available everywhere . 2nd position will be tough to find favorable terms 

[Amir Khan]

I agree with most opinions listed earlier. Primarily private lenders (not hard money lenders), will like to be in 1st position. 

However, once you have a relationship built up and solid track record with your private lenders, you should be able to also do 2nd (and even 3rd position). I know and work operators who do this all the time..

[M. Greger]

Hey, sounds like a solid strategy. I’d suggest checking out real estate networking events (local or online) like REIAs or BiggerPockets. You could also talk to professionals like attorneys or CPAs who might know people interested in lending. And don’t forget your own network—sometimes lenders come from unexpected places. Best of luck!

I am a private money lender myself too, let's connect!

[Jonathan Small]

@Dan Grove I would like to know how this conversation turned out.

It seems you have a lender willing to do 70-80% and be in 1st position.  You are looking for capital to do the other 30% plus closing cost and buying fees that will be in 2nd position.  Let me know if I got it right.

[Chris Seveney]

Quote from @Dan Grove:

Hi friends,

I'm starting to build a portfolio of long term rentals using creative finance.  I hope to use private capital to fund the entry fees in second position.  Does anyone have any advice on the best way to find these lenders?

Thanks

Dan

 there are people who do "Gator" lending which is a guru course taught about this type of lending. Not that I recommend any of the information, but just giving you a place to go look. 

Honestly, over leveraging is a really bad idea at this time (just my 2 cents).