How to Find a Private Lender

Question

Ann Bellamy · Answer

There is a REIA near you, @Jairus Gunn, it is called Western Mass REIA.  They sometimes list here on BP, they are on FB and Meetup.  @Bob Couture is one of the organizers.  There is also one in Albany, I believe.

Part of the issue is where you are located.  Property values are too low to make the loan size attractive to most Boston/Worcester lenders, and the drive to look at the property is not worth the time involved.  I have also seen people in Berkshire County talk on BP about getting together, so there may be a small group that is difficult to find and that I don't know about.

Your best bet is to network with others to find someone with that small an amount of cash to invest.  And if you are not willing to make the 2+ hour drive  to invest in yourself, why should others be willing to do the same (drive from say Albany or Springfield) to invest in you?  Get your butt in gear and go find them.

Mark I. · Answer

Not sure why C would be an issue since it should be a short term loan and the proceeds should more than justify the rates and fees.

Find someone that has 25k sitting in an IRA and educate them on how to get a nice 10% tax deferred return on it in just a few months of time.

Jorge Ruiz · Answer

@Jairus Gunn have you thought about a personal loan from a bank?

Rick Pozos · Answer

I would pay 10k in fees any day of the week to make a 50k profit. Not everything is optimal. I would rather pay 1k in fees to make 59k, but 50k is still alright.

Drive 2 hours to a meet up. To potentially find a lender so that you can make 50k or 60k is worth the drive. Even if you have to make that drive 10 times in a month to find the right meeting, its worth it so that you can make 50k.

Kerry Boyle · Answer

I have to agree with Mark here regarding C not really being an issue.Example: Let's say they charge you 15% and 5 points (also let's say $900 in junk fees) and you can complete the project before 6 months.

• You pay $8750 towards a down payment on the house (25%). Cash to close is $10k-$15k.
• Lender pays $56250.

• Lender makes $3,982.00 from origination (including fees and a few draw inspections) and $4,218.75 from interest for a total of $8,200.75
• Title/Appraisal loses you money on the origination (I'll estimate 500 appraisal and 1200 title). Cost $1,700.00
• You sell with a realtor, who takes 6% of the sale price $8,400
• Sadly, you pay title at closing and any other costs, let's say $3,000
• You are left with at least $50,000 profit.

Also, the lender should be more comfortable because you still have at least 20k contingency.

**All numbers I gave were off the cuff estimates.

Ronnie S. · Answer

I agree with @Jorge Ruiz

Duriel Taylor · Answer

@Carl Fischer ,

Great post, I would like discuss with you with my IRA (investment values) to use towards REI. I can be reached at on PM here. I look forward to hearing from you soon.

Regards,

Moshe H. · Answer

Hi @Jairus Gunn! Congratulations on coming to BP - smart choice. When I started on here over a year ago I didn't find any RE investors from Berkshire County on here. Slowly, I've seen a trickle and it seems to be growing. It's a unique market and a hard one due to its rural nature, so I for one am very happy to connect. I'm one of the ones who has pestered @Ann Bellamy in the past with questions but she's in eastern MA and like she said, it's typically not worth it for the city folk to bother with deals in western MA.

There is no group per se (that I'm familiar with), but I've been thinking of trying to make a Facebook group or something for western MA investors. Perhaps this post will be my impetus.

I know there is some kind of landlord meetup in Pittsfield, but I don't know any details. I could try to find out. That's only a 40 or 45 minute drive for you.

As far as advertising the deal, if you're talking about soliciting hard money I would avoid craigslist because it's likely filled with scammers. You can try on the BP Marketplace if you pay for a pro membership (but beware of scammers here as well!) Probably better off finding private money through a personal contact.

If you're talking about advertising to sell the deal, yeah, put it up anywhere and everywhere! There are tons of websites.

Jairus Gunn · Answer

@Ann Bellamy @Rick Pozos Haha thank you both for the kick in the butt. You are right.  I've marked down 4 meetings on my calendar.  Ann thank you especially for the info about meetings in my area!  I had assumed all the meetings would be listed on the national REIA site.

I'm curious as to people's thoughts/experiences advertising a deal on something like a Craigslist, or is there a better site for that sort of thing? I still plan to go to the reia meetings but I want to do something while I wait.

Carl Fischer · Answer

@Jairus Gunn

In regard to the REIA's. If you are going to make the drive, see if there is a full day REIA meeting coming up soon. That way you would be exposed to different speakers and topics to make your drive and time as meaningful as possible. I am located near Philadelphia, PA and there frequently are full day events. Usually on a Saturday. Our company will usually send a representative to speak.

How to Find a Private Lender

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