Private Lending Questions

[Mike Dugan]

I am a new investor in Grand Rapids Michigan and have recently launched a yellow letter campaign that has resulted in me getting two duplexes under contract. I have the credit (740) and cash/w-2 income to do traditional fannie mae 20% down, but wanted to explore the idea of private lenders at this point. I plan to continue buying and know that once I get beyond the fannie mae 4 house limit, it gets more complex for additional properties through them.  Figure now is the time to start learning about non-traditional source for financing properties.

I know I have seen people in the past on craigslist advertising 'get secure 6-8 % rate of return backed by real estate' and imagine these were people looking for private money as well. LTV on both should be re-assuring to a private investor I would think: I am getting one duplex for 48k, worth 72k, so about 66% LTV on that one. The other is a 65k duplex, that I will get for 30k, or just under 50% LTV. Both B-/C+ areas in Grand Rapids Michigan. I am looking for longer term financing since I want to hold these properties. Any ideas of where I can look/how to let people know I am in market for this? Will post on CL and mention and REI meetings, but wanted to know how others have done this...

thanks for any and all help!

Mike 

[Jeff Rabinowitz]

Be very careful. Those ads on Craigslist advertising a secure, specified rate of return probably violate SEC regulations. Since they are on the web the poster risks prosecution by all 50 State Attorneys General plus the SEC. If you get an inquiry from any of these sources you will lose--maybe big time.

Private money is a relationship business. Contact people you know. Let everyone know what you do and the success you are having. You may be surprised how quickly people with funds will contact you. REIAs are great places to find people who lend. Many of the lenders there may be experienced and will demand higher rates than 6-8% but they may also be easier to work with than a novice who doesn't understand the process. Happy hunting.