How to use Private financing as a beginner

[India Brown]

How do you get private financing if you have never done a deal before? As a beginner, is it possible to get private financing?

Or, would it be better to use a bank to finance a home and the rehab to do a flip ?

[Barry Pekin]

@India Brown,

The first thing that pops out at me is that you're posting this under wholesaling.  If you're wholesaling where you need money (if you need money) for a very short time while you turn over the property.  If you're rehabbing and flipping, you need the money for a slightly longer period (a few months, perhaps).  If you're buying and holding rental properties, that's a much longer term loan.  Each of these situations attracts different types of investors.

Hard money lenders typically loan money out for the short term - hours, days, weeks, or a few months.  They can be the most expensive.  It's a very active process as they're always looking for borrowers since they turn these loans over more quickly and don't want their money sitting around doing nothing.  They are going to focus more on the quality of the deal than anything else.  If they won't lend to you, they probably don't think it's a good deal - and you should take their opinion seriously.

Private lenders, especially when you're starting out, can be family members, friends, and other people known personally by you.  As you grow, you're likely to find more private lenders as your circle widens and you're more successful and you get to know more people who are looking to invest in opportunities to grow their money.  They're usually looking for longer term investments where they don't have to be constantly looking for new borrowers.  This is a more passive activity where they can be happy their money is making money without them constantly managing it.
Can you find private lenders?  Probably.  Look for people close to you, who trust you, where maybe they have money tied up in CDs, retirement accounts, or other investment vehicles that are typically paying low interest.  If you can offer them several times the interest they're currently making, they're more likely to be interested.
And treat your lenders like gold.  They should ALWAYS be paid off first, even if you end up taking a hit.