All Forum Posts by: Simcha Davidman

A guy who lists himself as a private money lender on a different platform happened to reach out to connect with me, and on that platform, I do not speak about my real estate investing.

But I thought it was very timely and wanted to have a conversation with him about what he does/requires, because I'm doing research on obtaining a commercial mortgage, or perhaps private money in lieu thereof. So I asked him what his terms are and he said 5% loans from $10k-$500m, up to 35 years. I thought, I need to speak to this guy!

When I called him (he did have an area code which fit where he claimed to be from), he had a pretty thick African accent (now, I know there are a lot of different countries in Africa, but due to my ignorance, I can't intelligently suggest where specifically he may from). In my head, almost immediately, I had this image of the guy sitting on the other end of the phone, also sending out emails to people about the crown prince of Nigeria needing to send someone millions of dollars for safe keeping.

Has anyone had this type of experience? Can anyone verify that this guy may be real? I'm leaving his name out at this point, on the off chance that he's legit, I don't want to be slandering him across the internet.

If not already obvious, please be careful. I'm working under the assumption at this point that if this seems too good to be true, it probably is.

@Andrew Sol what ever happened with this? Did you speak with the sponsor? Attorney? Other investors? Very curious to hear the rest of the story.

@Theo Hicks that is awesome advice on the categories! I'm going to use it, too!

Hey @Moshe Bloorian I'm glad you found your way over here, too! Alina is a great connection to have, very knowledgeable and helpful.

@John Casmon and @Todd Dexheimer Thanks!

@Ben Leybovich without giving legal advice, of course, can you offer some of the upside/equity to private lenders without getting into securities issues? Unless they're funding the whole acquisition, they'll never get first lien position over the big mortgagee.

@Omar Khan and @John Casmon why would a partnership with limited partners not require the full syndicate work-up? In other words, if I'm bringing in equity partners, why wouldn't I always call it a standard partnership? Is it solely a matter of voting rights?

Thank you!!!

@Pedro Martins just be careful. If you're involving passive/silent partners, you could fall under securities regulation, for which you would really want a securities lawyer's opinion and not just a real estate lawyer's. But the only thing I really know about this is that it's potentially complicated :)

@Kevin Moules great attitude! There are only lessons and learning. Best of luck and keep us posted!

I echo @Alina Trigub - there are no stupid questions! Or I might just be saying that because sometimes I don't get many responses to my questions, either :)

The (potential) beauty of private money is that it's whatever you work out with the lenders. Without meaning to offend, a lot of it might come down to how sophisticated they are.

Two approaches for where it seems like you are right now:

1) Go speak with these family and friends, tell them your plan, and get a sense of what they would want in return for lending you money. It may be a minimum percent (calculated and payable in a variety of ways) and you mentioned, a lien on the property, or even some of the equity/upside potential. In my limited experience, you are unlikely to get any real actionable information/commitments from this approach, but it will also put your RE investing on their radar.

2) You approach the same people with a deal already in hand (now this could be something you saw, you already made an offer, or you might even have an accepted offer and now are in the due diligence period). At that point, you essentially have the same conversation as above - either, what will it take to get your money, or this is what I'm offering you for your money. The more trusting and less sophisticated, the easier it may be - but that also means you have a huge moral responsibility toward these people.

As you do more research, and more importantly look at deals and have these conversations with your network, these things will get easier.

Don't take my word for it. Seriously, I'm in a very similar boat as yourself. But this is what I hear from people in the know :)