Finding a private investor through BP, what are your thoughts?

Question

Hi everyone, I finally got around to getting onto this site. I am a 24 year old college student in Buffalo NY who began real estate investing in my senior year of high school. I purchased my first 3 unit in 2010 using a family member to give me a loan and now own a great property with cash flow every month and happy tenants. I graduated with my 75 hour salespersons course this year between semesters and am on the search for more multi properties. Being a college student and not the best full time job history and income history I've got denied multiple times for a refinance on my property, wondering what your thoughts are for using a private loan and possible finding one through BP is? I know theres tons of scams out there so how do I go upon finding a legitimate lender?

Thanks everyone

Brandon Fischer

Thanks everyone

Brandon Fischer

Mindy Jensen · Answer

@William Morrison, thanks. Adding one now...

William Morrison · Answer

Mindy, great page add.  It could use a date though.  It's nice to know when something was updated or posted.  At least I didn't see one.I was just on a legal site earlier today.  In the body of the reference I needed was a note "no changes to date", so I looked all over the page and there were no dates.  Grin.

Mindy Jensen · Answer

@Brandon Fischer, your concern about scams is a valid one.

Check out our new page, https://www.biggerpockets.com/scam for tips on how to avoid a scam and what steps to take if you think you have been the victim of a scammer.

Ann Bellamy · Answer

Thank you @Jerry Ciesielski.

@Brandon Fischer, most private or hard money lenders are not an appropriate lender for a long term refinance.  So while you are researching lenders, I would do the following:

1.  Ask one of those lenders who turned you down exactly what the issues were:  DTI, FICO, income, etc.  Ask them where the numbers would need to be to get you approved.  Then concentrate on improving your credit worthiness.  Credit is critical, and gets you lower insurance rates, better lending terms, and in general makes your life easier.  When you're young you don't give it a second's thought, but as you grow in your investing, you'll find out how important it is.

2.  Go to the REIAs or investing groups in your area, ask people for residential lenders they have worked with and like in your area, and connect with those lenders.  Ask them what their criteria is and work towards meeting those criteria.

3.  Lastly, by all means connect with hard money lenders in your area, and ask about long term loans.  But be sure to ask at the REIAs for references.  Problematic practices include:

• a. changing the terms when you get to the closing table,
• b. taking up front fees and then turning you down at the last minute when you've now lost the deal,
• c.  telling you that you are approved and then failing to close at the last minute and going in and scooping your deal because you are now out of contract
• d.  Long delays on funding construction draws

The chances of your getting a non-recourse loan are slim to none.

Brian Baker · Answer

Welcome to BP, Brandon.  Have you thought about trying business credit funding instead of private or hard money?  It's a great way to get huge working capital fast, at very low interest rates, and to continue to do so well into your investing future.  Of course, as with all lending sources, always run your numbers first and make sure it works for you!  If you have any questions, feel free to message me.

Good luck, and hapoy investing!

Bhekizwe M. · Answer

Hello @Brandon Fischer.Welcome to Biggerpockets

The place offers networking opportunities and there are testimonials of successful deals completed.Always be cautious though

Mike Hanneman · Answer

As long as they are legit and reputable it dosn't matter where you find one. I would first however, attend some REI meetings in your area and then start asking other investors close to you about any private lenders they use so you reduce your risk. Ask your agent, if you have one or collegues, maybe they know of one.

Dave Visaya · Answer

Hey @Brandon Fischer, welcome to BiggerPockets. It's great to have you here! Let us know how we can help.

Michael Lee · Answer

Hello and welcome to BP!  I do not know much about invest but I did find BP about 8 months ago and I have been learning a lot while I have been at home recovering from a brain aneurism and a stroke.  I can tell you that it is the way to go, being a lender.  Yes, I would be concerned about doing a deal with someone I did not know.  Since you found him through BP I would still be a little bit concerned if you do not know him otherwise.  I would screen them like I would a tenant and ask for some referals.  I tend to be on the warning side but I am from Texas and look at everything real tough.  If his references check out on the good side I would probably go ahead.  Just get paperwork that protects you as much as possible and only invest what you can afford to lose.  The worst you can do is finding another lender or walk away from the deal.  It depends on how good of a deal it is a what they are offering.   I have heard someone say that the paperwork is more important than the property and that is not a bad wat to put it.  If you can get a non-recourse loan that is assumable without a credit check from an assumed, I would think hard about going with that.  Good luck to you and your decision!