Real Estate Investors: The 7 Things You Should NEVER Do as Part of Your Private Lending Program

As part of our private lending coaching program we spend a lot of time showing students what to do.  But we also show them many things NOT to do to stay out of trouble.  Please find below the top 7 things you should never do as part of your private lending program.

1.   NEVER Assume You Know Your State Regulations - I would say the number one thing any real estate investor should do before getting involved with private lending is to READ your state securities regulations.  I know this is not easy reading, or fun, but simply reading the regulations and understanding your requirements can prevent a major and costly mistake.  If you are not going to read the regulations you should, at least, consult an attorney about what is allowed and not allowed in your state.If you are not sure how to get your regulations simple go to Google and put in "securities regulation" and your state and they should be at the top of the list.
2.  NEVER Fail to Submit any Required Paper Work - Once you have read your state regulations you may be required to do nothing (great), you may be required to file a notice with the state or register with the state securities department.  Either way, be sure to understand your requirements and make sure you follow them and file the correct paper work.
3.  NEVER Advertise on the Internet - You should never advertise on any internet site directly for investors or make an offer to invest in a specific property.  There is nothing wrong with offering free information or educational material as a "door opener".  But do not advertise directly for investors on site like Craig list or other bulletin boards.
4. NEVER Have a Web Site for Private lenders - Again this relates to 3 above in that you should never advertise directly for money or investors on your own web site.  You can offer advice or education but nothing more.   
5. NEVER Use Out of State Investors - Never use out of state investors unless you have filed the proper registrations with the federal SEC.
6. NEVER Advertise in Newspapers - Never advertise in newspapers because you cannot be certain who is reading the paper.  The person could be from another state and federal regulators could deemed that as a cross state solicitation and require you to register with the federal SEC.  You can also never be certain if the person reading the ad is qualified for the investment.   
7.  NEVER Use These 5 Words in Your Advertising - Never use these 5 words in your advertising including Guarantee(d), Low Risk, Secured, Safe and Risk-free.  All of these terms will attract the attention of the federal or state SEC organizations as potentially false or misleading advertising of securities for sale.

For more information on Private Lending please go to http://www.private-lending-secrets.com/