Sparking interest for Private money lenders - What does it take?

[Jacques Cyr]

So it's Friday night, and I'm sitting here searching the BP forums for the knowledge I know should be here. I've had some recent success in getting a few residential properties under contract, with 2-3 more ready to go in the near future. The plan is to wholesale where possible (buying ‘at the numbers'), but when taking this route we don't "know" I'll be able to find an investor to wholesale the subject property to. So… covering my bases, the plan "B" on the exit strategy is to rehab, and sell for $X ARV.

Here’s the rub… the current hard money source I'm using, while providing good rates (8.5 – 10.9, plus a few points), limits even the most experienced rehabber to (2), and mayyybe… (3) properties at one time. This in the end, is throttling me back (which I understand – to an extent…) from putting additional properties under contract. Again… the goal would be to wholesale majority, and rehabbing every 3rd or 4th directly; however, I’d be looking for that bridge to carry me over the ‘from close date on the purchase’ to the ‘close date on the resale’ - buying me a little time to market and sell wholesale.

I've read several posts on how to find Hard money lenders (which I’ll continue to do); however, I’d prefer to build a relationship with private money lenders. On this front, I’m fortunate enough to have a few good ideas of the who I’d reach out to as a funding source.

Here are my questions (directed specifically to private money lenders, or those who have built successful relationships with such investors):

• 1.)When you’re approached, for this type of investment, what specifics would you suggest the individual approaching you ask, or provide?

• 2.)Best ways to structure the deals (again, hopefully a bit more economical than traditional Hard money lender path, and perhaps with less bureaucratic loop holes and paperwork)?

• 3.)What about approaching investors who haven’t traditionally invested in a Real Estate investor?

• 4.)What’s your biggest pet peeve, when approached?

• 5.)What are you most impressed by?

Being the “greedy bastard” I am… the idea of sharing 50/50 split of profits is driving me a little nuts. But then again… I simple don’t have the capital I need to make the additional deals happen without the private money. And 100% of nothing is… hmmm… oh yah… nothing.

Anyway, bottom line I’m looking for suggestions on how to speak the language of those I’d like to approach about providing private lines of credit. (Full disclosure, I have excellent credit, with ‘fair’ amount of cash reserves).

[Michael Seeker]

Hey @Jacques Cyr - I'm no expert on wholesaling, but my understanding is that if you're doing it right you should never hold the property.  It sounds like the way you want to wholesale is to buy cheap, do nothing then sell slightly higher (incurring 2x transaction costs).  My understanding of wholesaling is that the wholesaler is more of a party to the sale that gets a check at closing, but generally never holds title to the property (except maybe briefly through a double closing).

I'm thinking the process you're using or planning to use might need some improvement rather than trying to find additional money to bring into the picture.  Just my .02