how to get Private money?

Question

How do I get private money? also after I get the money how do I create a legal mortgage?

Larry Hoffman · Answer

Hey David,

Here is what I do to find private money and you can too:

1.)	Get out and drive around the area(s) youâ€™re trying to invest in and look for properties that are currently being rehabbed.
2.)	Next write down all these address.
3.)	Go down to your recorderâ€™s office and look up the owner of the property and then lookup who the mortgagee (i.e. lender) is. 
4.)	Write the names down on a pad of paper.
5.)	Send these mortgageeâ€™s a newsletter by snail mail, yes by snail mailâ€¦. BE DIFFERENT!!!!!!
6.)	Rinse and repeat.

Now, your asking what does my newsletter say? On the front page it has information on how to save money along with some jokes. The newsletter also has info about my private lender program ( I alternate this info ). One the back of the newsletter I show sample deals along with  money my private lender actually made on that given deal.  I also have a link to my website and my contact info.

I never solicit at any time they can call me to opt out of the mailings. Right now I have 123 people on my mailing list and â€œnotâ€ one person has  requested to be removed from my mailings.

I did a test to see if my list liked my newsletters. I stopped mailing for 2 months and I had 63 â€“ 68 people call to tell me they didnâ€™t get their newsletter for those 2 months and wanted to know what was going on.

Iâ€™ve also picked up 2 new private lenders this year and the year isnâ€™t even over ïŠ

I get requests all the time for more information about my private lender program among other things.

Another way to find private money is to look in your MLS for houses that were purchased with cash. In my MLS it doesnâ€™t have that information, so I do the recorders thing. But you can look at the cash transaction and write down the address and do a simple cross reference just to see if someone made a loan.

Dave to answer your other questionâ€¦ I would find an attorney to handle all the paper work for you.

This is just my suggestionâ€¦ I would never try to handle this by yourself, way too many things that can go wrong.

Go to your local REIA and ask around for real estate attorneys and contract them and explain what you want to do.

Hope this helps!

Another thing you need to have is a power point presentation and a creditability kit to give these potential private lenders.

Also a big thing you need is a web site outlining your private money program.

[LINK REMOVED]

Larry Hoffman
[LINKS, E-MAIL, PHONE NUMBERS REMOVED]

Chris Martin · Answer

A technicality, but the technicalities tend to be very important. When talking about "title", we really mean a "deed" here, and the property owner holds the deed. A "true" private lender is a debt holder and will not be identified on the deed. An equity partner will have an ownership interest and will generally be identified on the deed. The Deed of Trust is the security instrument that defined the trustee and via the D-T power of sale clause, the beneficiary (the lender) is ability to recover in case of borrower default. The note (or "Mortgage Note" per Laura) details the terms, etc., of the repayment.

Check your state law and with an attorney, since almost everywhere an attorney will cringe at the statement "...you might also give them a Deed in Lieu of Foreclosure to hold on to and exercise in case you don't make your payments." The prevailing term used when I inquired about this in this same context was "against public policy". While I am not an attorney, I do believe that the enforceable and proper action to take would be as defined in the D-T. That doesn't preclude using a DILF as recourse after default occurs, just be very, very careful having a signed and notarized (but unrecorded) DILF "hanging around" as part of your process. Check with your attorney first.

James Hiddle · Answer

Well finding private money isn't going to be easy if it was we'd all be rich by now.

With that being said first I would suggest getting chummy with a local SEC lawyer to go over regs on SEC laws both state and federal.

It's possible you have to be compliant which will cost you up the ying yang but that's the price in keeping squeeky clean because these days messing with securities is very serious.

People who have money that might lend you can be:

Family
Friends
Doctors
Lawyers
Angel Investors
Funds such as Hedges,Mutual,etc
People with 401 K's
People with IRA's
People with Stocks,Bonds,etc
Private Equity Firms

And a few others. Now approaching these types of people is depending on how compliant you are with the SEC. I suggest contacting as I mentioned before an SEC lawyer and pick his brain.

Laura Alamery · Answer

The easiest and fastest way to get private money is to run an MLS search in the area where you plan to invest, find out the cash buyers for that area in the last 6 months and look them up at the Recorder of Deeds office.
Then contact them to find out if they will partner or loan you money on a particular deal: they might want to partner for the first few deals, to protect their investment, but they eventually will just loan out. 
This works out great for short term (less than a year) private funding. 
As far as mortgage, they will be on the title via a Deed of Trust and Mortgage Note, so they are protected. If they are particularly worried about the process and new at this, you might also give them a Deed in Lieu of Foreclosure to hold on to and exercise in case you don't make your payments.

Chris Martin · Answer

As a practical example, here's a link to an SEC filing for a now defunct company in case you go down that route... http://sec.gov/Archives/edgar/vprr/03/9999999997-03-022915 but I'd contend that using the list Mr_Investor provided along with some of the tips from the links provided by Joshua will get you pointed in the right direction.

Chris Martin · Answer

See also Joshua's post here: http://www.biggerpockets.com/forums/49/topics/20699-private-money for a bunch of links that may help...

Chris Martin · Answer

IMO, conversing with someone "in the business" doesn't fit the definition of a "public solicitation" that the SEC talks about.

I do not know the intentions of the OP, so answering the original question "How do I get private money?" may depend on his real goals. From the link in his signature, his site says "Our professional, experienced home buyers have processed more than $100 billion in property since 2002..." so maybe his intent is to pool large amounts of private investor funds and behave like the busted investors in your post http://www.biggerpockets.com/forums/50/topics/55532-please-be-careful-when-raising-funds-sec-cease-and-desist-letter-. (Summary: ...companies have raised at least $972,000 from at least 30 investors, according to the lawsuit...) In that case, yes, I think he'd better be really careful.

On the other hand, if he is really like most investors out there... looking for one investor for their one property at a time, using a recorded security instrument with full power of sale on default... to a sophisticated investor... I think the SEC could care less. I would say if you change the words sophisticated investor to accredited investor, then I'd say with some confidence the SEC could care less. This case, http://www.ssb.state.tx.us/Enforcement/files/1681.pdf, looks nothing like the private lending I've done, seen, or will do... this looks like Wall Street with the words "Private Lender" attached.

Bryan Hancock · Answer

Some of the advice in this thread is extremely dangerous IMO.  DO NOT send out solicitations to people to try to get them to lend money on your projects.  I posted about someone doing something similar to this in another thread that is getting fined several million dollars.

Network and perform on your investments.  Rinse and repeat.  Do things the right way and consult an attorney!  You can be THROWN IN JAIL for not doing things properly.

Will Barnard · Answer

Also, let me clarify about my "non-sophisticated" statement. This is not to imply that they are stupid, rather to imply that they do not have either the team, the skills, the time, or the desire to be an active investor who does the actual flips.

how to get Private money?

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