All Forum Posts by: Brendan Davis

Hey @Brendan Davis I noticed you hadn't received a response yet.  At first, I didn't expect I was the best person to reply here, given your questions were about private lending and how to trust a private lender.  I haven't utilized private lending personally, but I know several people who have and who ARE private lenders and so I figured I would just explain how I met those people, and perhaps that is helpful.

I wonder if you've done your own multi-family deal yet? I have found that helps establish rapport, and credibility, and gives a client some idea of what my experience is/has been. Doing my own deals has also dramatically increased my networking capability. having done it, got my hands very dirty, and experienced full-cycle of tenant management, property management, and rehabs - I can actually answer most of those types of questions. I have friends now who are in just about every space I could need an "expert" in. Lending, contracting, electrician, plumbing, architecture, commercial investing, private lending, BRRRs & rehabs, HELOC lending, you name it. Without having done deals, I wouldn't have had nearly as much of a reason to start and build deeper and more meaningful relationships with these types of people. A lot of them I've either paid to do work, met on a referral, helped with a deal, or some other way of supporting them - and that's what it's all about.

As far as who to trust, I think my message is clear already.  If I've built a relationship with someone in this real estate arena, it's because we demonstrated to each other we are trustworthy to some degree, and in order to maintain that relationship, we put effort into maintaining that trust.  For example, I don't just send my trusted electrician to any random person who claims to want one "ASAP".  I want my electrician friend to work with people who have jobs within his scope and who are reasonable to work with.  Because I've looked out for him in this way, he has called to thank me for making sure I send him only to great clients and offered to do favors for me on my duplex.  The same goes for private lenders.  They want to build relationships with people that understand how they work, and they want to work with people who are serious and thoughtful.  I would just keep that in mind as you network.

Try to do deals for yourself if you haven't already, and I think you'll be pleasantly surprised at what that does for your career :)  Hope this helps!

Just off the top of my head.

Multifamily---

20% down is standard unless it's a you live in FHA, then it's 3.5% down.

If you intend to live in a unit get to know the FHA loan for 2,3,4 plexes and use that.

Make yourself into the borrower they want, ratio's down, cash reserves--different lenders may haev a little different requirements between them.

Some other smaller bank held loans (portfolio loans) may be 20% to 35% down.

Focus on getting the down payments while keeping an eye on any net worth requirements the lenders may have for you personally.

The more down payments you can get the faster you can grow.

Many people hold their assets in an LLC, or LLC's (not a Corp), many others use an Umbrella Insurance Policy--it's a decision you will have to make.

You are looking for Cash Flow. More cash flows from (it can, or it can't--it's risky) more run down areas (read that can be Dangerous areas) than the middle class areas, but they can cash flow too.

Decide on if you are a Class B or C guy (Class D is usually not a good move for a beginner, due to the roughness and issues of the area).

You will need a good accountant for taxes and bookkeeping, and an eviction attorney.

You can self manage or hire a manager.

Good Luck!

 Hi Brenden, 

Great job at keeping the fire going and pushing past failure. Where are you located at? I have found most of my Private money investors from family, friends, and old neighbors. I think the more passionate you are, the more you get under your belt, then the more people will be willing to give you their money. To start everyone thought I was crazy and going to go bankrupt. But now those people are coming to me asking to invest. I always like to write out a contract even though it may be someone really close to me. It is always good to have things on paper. I have also found some private money lenders from cold calling. They did not want to sell their deals although they were willing to lend. There is also hard money lending that a lot of the people who are starting out who do not have 2 years of pay stubs get their loans from. That could be another option for you.