Need more cash to do your real estate deals? Where do you find private lenders? Are they a money source only for a select few who have developed great networks and relationships? Or can you locate private lenders to help grow your real estate investing business?
Private lenders are the secret weapon to keeping the money flowing so you can keep your investing business growing and profiting. And amazingly enough, private lenders are incredibly simple to find – if you know where to look. Good news, Active Rainers! I'm going to explain the mystery.
Before I leak my secret, let me tell you why you need private money lenders to grow your investing portfolio. First and foremost, you will pay less for your investing dollars putting more profit in your pocket. Hard money lenders have their place in the investing game, but why pay anywhere from 12 -15% plus points if you don't have to? Private money lenders will accept anywhere from a 4 – 10% return on their money.
Private money lenders also allow you to purchase properties without banging your head against lender-imposed limits. Many investors don't know there is a limit to how many mortgages you can have before commercial lenders decide you are too risky to do business with. The limit has been as high as ten mortgages and as low as four. Seriously? If you're an investor, a portfolio of 8 – 10 houses is a low-end starting point, not your investment glass ceiling.
Best of all, private lenders, especially those you have built a strong relationship with, can pull the trigger fast. They know you, they know how you evaluate deals and they can sign a check (or send a wire) without blinking. If you are working with private lenders you won't lose deals to other investors just because they have cash on hand.
So how do you find these private lender investors? I like to shop close to home. Having private money investors from my local area has a several big benefits. First, it's easier for them to meet me, see that I'm a real person and take a look at what I've done previously in my investing business. It creates a comfort level when someone is handing me money rather than mailing a check or doing a wire transfer. They know where I live. They know where I do business. They know how to find me and follow up on our deals and the properties we buy together. Another benefit is that their money is conveniently handy. Picking up a check or getting money into my title company's escrow account is just faster and simpler when everyone is local. Sure, I'll take long distance money, too! But local is a good place to start. And local is like working with a valued team member.
Go online to your county Clerk of Courts office. If you can't access the records online, you're going to have to get yourself down to the Clerk of Courts office in person. It will be worth the trip, I promise you. It seems like every county is set up a little differently and some are easier to work with than others, but here's the general process you will follow:
I put the names and addresses of private lenders, as well as the amount they have loaned on an Excel spreadsheet which is easily merged into my word processing program for letter creation. From there, I send out a simple letter, introducing myself as a local real estate investor and telling them a little bit about me, including the fact that I like to work with private investors. I give them my contact information as well as my website address so they can see what I do and check that I'm the real deal. Then I simply ask if they'd like to be informed of any investing opportunities that I come across.
I always follow up with little "touching base" notes – at least every other month. I don't clobber them with a credibility kit right off the bat or press for money right away. Think of it as a dating game with someone you really like and don't want to screw up on. This isn't the person you just want to say you took to dinner once. This is the person you think you might want to settle down and raise a family with. Go slow, don't scare them off and let them see the value of what you do. These privatre money lenders know a wanna be when they see one. Prove that you are a valued member of their team. True players have their own parameters of what they look for in a deal. If you can, meet for coffee and talk about what kinds of properties they like to invest in and what kind of returns they like to see on their money.
There's a FORTUNE sitting in public records – all the money you will ever need for your deals. But if you don't ask, you don't get. Why are you still looking at this page?? Click on over to your local Clerk of Courts site NOW.
This is just one of the great tips I enjoy sharing about locating cash to invest in real estate. Check out my blog, watch some of my free training videos, and let me help you succeed as a real estate investor.
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