new private money investor

[Mark S.]

Hello-I am an accredited investor, in Atlanta, with private money, interested in learning more about the ins and outs of investing with private money lenders.

Thanks

Mark

[Jeff S.]

First, be careful publishing about substantial assets online @Mark S. If you haven’t already, you’ll get emails from every crackpot and charlatan around. Lending is a very personal, relationship based business and the web is not the place to form these.

Your best bet is to attend some local real estate clubs and these can be found thru meetup.com. Here, you should be able to meet all varieties of large and small private/hard money lenders. Unless you decide to change your focus, you might approach some of the larger lenders. These commonly find borrowers and originate their loans and then sell them, or they might run a mortgage pool.

Within those that sell their loans, you have at least two choices: 1) those that originate their loans and then sell them to anyone on their investor list, and 2) those that know you and your criteria (over time) and will pair you with specific properties and borrowers. For the same return, your best bet is obviously the latter.

Understand that once you buy these loans, you are now the lender with all the responsibilities and headaches (which should be few). The private lender is all but out of the picture. In this case, you really have to do your due diligence on the private lender, the borrower, and the house. All three. Frankly, after you've done a few of these, you'll probably start thinking about finding the borrowers yourself and using a broker or an attorney to do the origination for you (as state law allows) for a nominal fixed fee.

Alternately, some lenders run mortgage pools. These are sort of like mutual funds. You simply give the lender your money to invest in many mortgages at once. They do all the work, hold the notes, and pay you a monthly return. In this case, you don't actually own any specific loans. Here, you're placing all your faith in the operator so you better check them out well.

Last, but related, there are many companies that offer both debt and equity based syndications on large properties all over the country; actually, the world. While I'd never buy a note or otherwise lend money on a local property I hadn't seen or met the borrower, these investments can be very safe, profitable, and also offer some diversification and tax benefits if you need these.

Good luck, Mark.