“Who are the Private Investors? Where do I find them?”
I am sorry to burst their bubble, but Private Lenders, Private Investors, Angel Investors, Silent Partners are not out there advertising for people to lend money to, the people who do that are called BANKS. And you can’t call up a local investor or association to find out who the private people would be, or then they would not be private, but possibly a rehab loan company or maybe a Hedge fund.
If you are looking for a company that offers funds for investing commercially, you might do an internet search online for a few terms like:
· Rehab Lenders
· Transactional Funding
· Hard Money Loans
There are a few companies or rather web sites out there that are go betweens for angel investors, but I have not found them to be very effective.
But if you are looking for that true, private investor, they don’t just fall into your lap, you have to do a bit of work to find them, to win them over, and then set up a deal with them.
So here’s the big secret with private investors, the steps to success if you will:
1. You have to do a few deals, sorry, but most people are not going to trust you with any kind of money until you have done some deals, unless you are very highly trustworthy, and have an income to pay off the loan from the private investor, even if the deal goes south.
So as you do deals, keep a record, all the facts and figures on each and every deal, it will come in handy later.
2. Be sure to be a little bit of a bragger, “yea, I just closed another deal and made $2,000” or what ever. When friends and family see you are making money, they always want to get involved – there’s your next private lenders.
3. Get all the needed forms and documents to secure a private loan against your next property. Talk to your attorney or title company and they can set you up.
4. Write down your elevator speech and practice it.
5. Create a presentation showing how it works and example deals
6. Then let everyone you know that you invest in real estate and ask people if they might be interested in investing by becoming a lender for you!
It’s not really a hard job to find private lenders, but it is time consuming and you have to be prospecting for lenders all the time. Go to the ball game, talk to the guy next to you. On the plane, talk to your seat mate. At the dentist, talk her up. At the bar, talk to the bartender and the people around you.
Everyone , everywhere is your potential private lender. There is no magic list of these private lenders, they are all around you, and you have to be working all the time you are out in public, networking online, or talking on the phone – you never know who will be the magic guy or gal that makes all the deals happen.
Now if you want to brush up on how private lending works , the paperwork you need, how to find them, and how to approach them, I have some resources for you.
1) This Saturday January 23rd, 2010 I will be teaching 3 Professional Housing Provider Workshops on financing – one on owner occupants, one on investor financing and one that is advanced financing for investors that includes both private lending and self directed IRA. These are offered for members of Mid-America Association of Real Estate Investors at $25 each or $69 for all 3. Non-members cost is $35 a class. Only 9 seats left.
2) Then on Tuesday Evening of January 26th, Alan Cowgill will be teaching on a teleconference his method of finding private investors. Cost for this is free, but you have to be pre-Registered. To pre-register, click here
About the Author: Kim Tucker is a real estate investor, real estate broker, and director of a REIA group in the Kansas City market. She has been in real estate and real estate investing since 2000. And if you would like to earn a good return on your investment by lending to an investor on real estate transactions secured by real estate, you might give her a call. She has 100’s of completed, profitable transactions that she and her partners have completed in the past 10 years.
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An angel investor usually has lower expectations about their return in investment,but do want to know you have a clear plan for he/she to exit.They often have domain expertise in your field of business and want to be involved in the company.When picking an angel make sure there is a good fit between your style of management and the angel's interest in being involved.You want to pick an angel that will be complementary to your style.
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