What Worked for You?
As real estate investors we have had the opportunity to talk to and learn from many people. I know that I have spent my share of money on educating myself and the people in my office on investing and private lending.
I can tell you that I have picked up so many things that I took home and implemented only to have them fail miserably. I have taken and tweaked everything and through constant testing made it work in my market.
What have you found during your implementation that just plain didn’t work for you. Either because of the market, the material or there was a fatal flaw in the concept. Let me know what you tried that worked and what did not work.
I am working to finalize my new Private Lending Product “Cracking the Private Lending Vault” and want to answer as many questions as I can for you all. So share what you know. I will answer these questions on the blog as well so you will receive an answer quickly.
I was never able to get private lenders to any of my small group meetings. I had a few friend show up but I mailed out a bunch of postcards and no one showed.
REPLY FROM PAUL:
Hi Dynamo2,
I understand your frustration. Really it is a marketing problem. You need a better piece of marketing to get them in the seats. Also you need to offer them something. Something of valuable, like great free information. I offer them a information packed CD and a special report just for showing up. My presentation is short and to the point and benefit oriented toward them.
But in actuality small group presentations may not be for you. It may be better to talk to people one on one rather than in a group setting. You also need to be very careful in your advertising and your offer. The SEC and State regulators can come down on you very hard. In my course I spend several chapters about what you can an can’t do to market to private lenders. This one thing is a big key for you to master. Once you have it you will be set for life.
Good luck
I was able to line up money but I was not able to get properties fast enough to get the money.
When I had the properties my lenders had committed the money. When I had the lenders I could find the properties to secure them against.
What comes first the chicken or the egg?
REPLY FROM PAUL:
The Chicken. No the egg. No the Chicken.
Sorry, I couldn’t resist. It is important to develop relationships with the lenders PRIOR to obtaining any properties. If your state requires filings then you need to do that prior to any lending activity. So the answer is the EGG.
The key here is to have enough eggs in your basket that one of them will be ready to pull the trigger when you have a Chicken walk by. With more lenders you will typically have one ready to fund a property when you need it.
Hope that helps.
I have never done a deal before. How can I be credible in the eyes of a private lender?
REPLY FROM PAUL:
You have to be professional in the way you approach lenders and your business. You may not have done a deal yet but have you been educated in the field. Have you attended bootcamps or bought courses and applied them? Have you worked with another investor on their business?
These are all ways to add credibility. When you are doing your first deal or two it may be best to work with people your know really well like friends and family. They will trust you and invest in you. That can be a way to over come this hurdle.
Does this answer Your Question?
The cost of the courses. I really don’t have money laying around to buy books and tapes. I use all my money to run my business I don’t want to spend it on something I will only use once.
REPLY FROM PAUL:
I understand your concern about spending money. But you need to invest in your education. It really wasn’t until I started spending money on courses and bootcamps that my business was able to really get up to speed.
I would rather spend money to learn from someone else’s hard learned lessons than go through the life lesson myself. Anytime I can do that I will. By not knowing the answer to questions and making mistakes I spent more money on “Life’s Seminars” than I have on any course that I bought.
That is assuming that you read, listen to and study the course and apply the education to your business.
It costs a lot less in the long run.
Just my ¢2 cents.
PS. My course costs a little more than some others available. In this case you really do get what you pay for. It also pays for itself in the first deal you do. I look at any educational investment this way. After that I can do deal after deal and increase my ROI in the product.
It is only expensive if you put it on the shelf and don’t use it.
Putting People together on a private mortgage to cover the purchase amount. I am only able to find people that have $10,000 – $25,000 available.
REPLY FROM PAUL:
Daredevil,
That is mortgage pooling. It is illegal to pool money to create a mortgage. DOn’t do that. But there are techniques that you can use such as syndication, entities such as LLCs and Limited partnerships to do something similar. Be careful follow the guidelines and stay out of trouble.
I cover this in my course as so many people have people that have small sums to invest but need bigger sums to buy properties.
What are the most effective ways of using private lending in my exit strategies?
REPLY FROM PAUL:
Sorry REwizard, I need a little help understanding what you mean by using them in your exit strategies?
If you mean effectively using them based upon your strategy I would do the following:
Placing Private Lenders that don’t are looking to earn compound interest and keeping their money working on exit strategies like Lease Options, Seller Financing, or buy and hold.
If a lender only wants to have his money out for short term (under 12 months) I would be using them on Rehab-deals that would allow me to refinance or sell quickly.
Be careful about placing the right lender on the right property because if you don’t you can leave yourself exposed.
I plan to use my self-directed IRA money to lend privately. How can I make sure I am in compliance with tax rules when lending money this way?
REPLY FROM PAUL:
Education and talking to your self-directed IRA custodian.
The main thing is to ensure that you do the paperwork properly and have it handled with a 3rd party. The next is to ensure you don’t self-deal.
Self dealing is where you lend money to yourself or spouse or into an entity that you control and put money into your pocket outside the IRS guidelines.
This is a pretty complex topic and something I cover in depth in the advanced manual that is part of my “Cracking the Private Lending Vault” Course
What information can I use to show private lenders that investing their money in my RE deal is a wise investment?
REPLY FROM PAUL:
Hi Bonnie,
Great Question, The answer is a little too long to write out but I will address in depth for you as soon as I can. Short answer is to:
I would then show what is in the deal for them. Interest rate and length of the investment so total profit to them.
Stay tuned – I will answer it in detail shortly.
Why are you coming out with a product on private lending? Isn’t there enough courses out there on the subject?
REPLY FROM PAUL:
That is a great question Bear. You are right there are some courses out there on Private Lending. Alan Cowgill has a great course and I learned a lot from him.
I have taken what I learned from these great mentors and brought them back into our business and work on them and improved them. I found out what worked for me and what didn’t.
I developed tools and process based upon everything that I have learned and adapted it here in this course.
I have many friends in real estate that see what I do in my business and asked me to teach them how to do it. So I developed this course for everyone to learn from.
Another reason is that I see so many Private Lenders getting taken for a ride by real estate investors that have gotten into trouble and I want to prevent that. I am on the board of directors of my local non-profit Real Estate Investment club and have heard so many horror stories that I wanted to prevent more if possible.
I figured the best way to do that is to educate Real Estate Investors and Private Lenders.
This course is fantastic. There are things here that you have never seen before. I have developed some cool stuff and you will love it once you see it.
Personally, I can’t achieve my goals without using private equity. It is the single most critical part of my business model. If people work hard and do their due diligence they will be able to find the money they need. It took me a while to build my list, but it’s paying off now!
I currently am working with a few private lenders that are previous acquaintances and recently have been marketing for more. I have sent three postcards so far and have had a few people sign up for my emails, but no one has contacted me about lending me their money. It seems like it takes a few months of talking to interested parties before you receive a commitment from them. Do you have any ideas on how to speed up this process?
I have been lending my money privately for a while now and it’s been working out great. But I would like to know how to underwrite my loans, and figure out how to best show my borrowers what my expectations are.
I have been able to find private lenders using various marketing strategies, which is great. I at least have gotten through that hurdle! What I have had difficulty with is finding lenders who are willing to lend their money at reasonable rates. All of the ones I have found want 20 to 50% down and depending on the loan amount, I typically don’t have that kind of money available. Is 20 to 50% down something I should expect to pay when working with any private lender?
REPLY FROM PAUL:
Lenders rates and terms very. Just don’t confuse Private Lenders with Hard Money Lenders. You can find out more in the Videos.
I am a private lender and have a borrower that has failed to repay their loan amount. I’m afraid of being stuck with a house in this so-so market, as it may take months to repossess and sell it off. Is there anything else I can do to try and get my money back from my borrower? Or should I opt to take the house and hope that I can sell it? Would wholesaling work in this situation?
One of the biggest problems I have had with private lending is the inability to mix my personal and retirement funds on the same deal. I’ve had a hard time determining the best way to pool all of my money to loan out to people.
As a real estate investor, I have asked all of my friends, acquaintances and relatives to lend me money and have had some success in receiving funds. But, I’ve also asked these folks for referrals with no success. What should my next step be in finding more private lenders?
I was having a difficult time finding a private lender that had enough money to fund my deal so I am securing two private lenders to one property. What is the best way to secure them and ensure one of them doesn’t back out? Otherwise, my deal would be dead.
What I like to see is private lenders buy a property and allow me to resale it for them. They take the risks off my shoulders and make the deals work. I bring them deals to make them money, and sell the places for them to make myself money. It’s a win-win situation!
REPLY FROM PAUL:
Well Caboose, that isn’t what private lenders typically do, that is a real estate investor does. It sounds as if you are a real estate agent that would work well with a real estate investor. Good for you. But remember where there is risk there will be reward. So while you collect 3% or so as an agent the investor will collect 15-20%. But if that is where your heart lays then great.
I have marketed for and held a couple of small get-togethers to educate people on private lending. I guess my marketing was successful enough, as I had roughly 20 people show up to each of the two “events”.
I had high hopes that I would be able to continue my relationship with the people that attended and eventually gain enough of their trust to receive private funds from them.
Well, in spite of the fact that I was able to get people in seats, my presentation must not have been very good. Of all the people I followed up with (numerous times spread out over the course of a couple of months) not a single person returned my phone call.
I feel in part that this may be due to the fact that the people who attended my events were novice lenders, or had absolutely no concept of what private lending is.
Are there any key points I should make sure to always include in my presentations to potential private lenders, particularly for those who have never been private lenders?
I have been using the new 1% funding for investors that just came out. So far it’s been great!
We are finding more and more that good old fasision networking is the best way to find private lenders – talk to everyone you know and tell them what you are doing and get the word out to as many people as possible – it will eventually pay benefits
Thanks
Mike