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How to Find Private Money Lenders


paperfree Aditi Bansal

Updated on Friday, September 01, 2017

To see the next deal, real estate investors use days, hours, weeks, and months. Some get lucky and find their deal within the first few prospects. To others, it takes months to only viewing opportunities after prospects just to get a deal.

tags  #Private money lenders  #Circle of Investors #

 

The hardest part is finding money for your real estate investments. Without money, you can’t complete the equation. You need to actively bring private money lenders to tie up a deal and fund a real estate investment opportunities.

Private money lender

A private money lender is a non-bank company or individual that lends money which is secured by a note or a deed of trust with the purpose of funding or financing a real estate transaction. The private money lenders are always considered to be association based than commercial hard money lenders.

Why choose a private money lender?

Spending an inordinate amount of time learning ways of finding and typing deals and spending less time on how to raise fair capital from private money lenders is the biggest mistake that new real estate investor make. It is essential for real estate investors to get the knowledge about the ins and outs of raising money and finding a deal. The time and effort you put in searching for a deal will be for nothing if you do not have the serious money to tie up a deal or funds to obtain it.

Always place a serious cash deposit down with your offer when you make one on a piece of property. Getting to raise even some few dollars can be a big deal in starting a real estate investment business, leave aside the requirement to buy the property if you are living paycheck to paycheck. Therefore, if you work on getting capital from commercial money lenders and at the same time closing deals; you will have a big opportunity in investment success.

Finding private money lenders

  1. Primary circle of investors mainly consists of family members, friends, neighbors, and coworkers. In many cases, investors turn to family and friends for their funding needs. This is a popular way of financing because it is easy to get and talk to the individuals who know you more and that they are likely to say yes. However, there are some disadvantages of raising funds from families as they may not be sophisticated enough to differentiate between a good and a bad deal. Being very clear about the risks and downsides is important.
  2. Secondary circle of investors mostly consist of the colleagues and friends of your immediate primary circle of investors. This is the second best way of raising funds with private money lenders as they are willing to listen to you keeping in mind that you have been given approval by your primary circle mutual contacts. There are some demerits of raising funds from secondary investors as it is likely to consume more time to raise money in that they say yes and don’t know you personally. Prepare an investment presentation and take time in meeting these investors to raise funds.
  3. The third circle of investors are the ones that are removed from other networks because you don’t know them. It takes long to convert these investors to capital partners.

Finding these private money lenders has been the hardest part for real estate investors. However, you can utilize websites and post your investment opportunity and actively contact potentials third party circle of investors.



This page with a focus on Private money lenders, Circle of Investors was shared by Aditi Bansal.

 
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