Money doesn’t grow on trees. Private Money doesn’t grow on trees either. Surprisingly though, private money is all around you at the super market, church, the doctors office, and even right next door.
That’s right, private money sources could be anyone that you know that has a pile of cash stashed away in a savings account rip for picking. Most of these sources are just waiting for an opportunity to make their money work for them instead of them working for money.
Private Money vs Partnering
Thats where real estate investors come in to make the money work for the both of them. The private money lender can just act as a lender and charge a fee or interest rate. Another option is to form a partnership if the lender wants to participate in the real estate investment. With partnerships the profit is usually split. A fair ratio is determined based off who loaned the most money and who did the most work.
Partnering can be disastrous if you don’t have the right kind of partner. Often people think that they know more than they really do. When their money is involved, they might try to take control and make all the decisions, even though they are not the right ones to make. You will have to work with someone that is open minded, humble, and listens.
New to Real Estate Investing
Now lets be real, if you are new to real estate investing it’s probably best to get a few deals under your belt before you start scoping out private money prospects. There are two main reasons why you should wait.
- Most private money lenders will want to know that you have some “skin in the game” before they will hand over their hard earned cash.
- A lot of times private money lenders are friends and family. This can lead to some hard feelings if a deal goes sour.
If you have done tons of deals and have some “skin in the game” it will be easy to find hard money lenders. People will be asking you to use their money. If not then you will just have to convince them that you know what your doing. Show them a deal you have found and run them through the numbers. Show them the reward given the risk involved.
Where to Look
So where are the best places to look? Really anywhere is a good place to look for private money. Anybody who has money they are willing to give to you to invest and make them more money.
Try looking for local meetups and social gatherings. Just start meeting people. As your network grows, you may talk with other investors who know of many private money lenders. They could introduce you and make them feel comfortable working with you.
Here is a list of possible private money lenders:
- People who don’t spend a lot and have a lot of savings
- Friends and Family
- Retired (or close to retirement)
Keep building up your network and as you meet people you will have no problem finding private money lenders. If this post was helpful to you in anyway feel free to leave a like, share, or comment down below.