Great Tips To Help You Find Private Money Loans Near You
Taking a look at some of the top tips and advice to help you find private money loans and reliable hard money lenders in your area.
Are you breaking into the real estate market with new investments, but wondering how to supplement your deals?
You’re looking for private money loans. But you may not know how to get one or where to find a lender you can trust.
Keep reading this comprehensive guide to learn some of the top tips and advice to help you find private money loans and reliable hard money lenders in your area!
What You Should Know About Private Money Lenders
Unaffiliated with a bank or any financial institution, a private money lender uses their private fortune to make investments in areas like real estate. The lender will profit from the interest paid on the loan.
Since these lenders are individuals and not banks, they will work directly with the borrower. But there are private lending companies where individuals can pitch to a group. This could be a group of people who are interested in using their private savings to invest in different projects.
Private lenders often work faster than traditional financing, so they are helpful to many investors. They also have different requirements than a bank or other institution. But it will be a similar process to other loans, including similar interest rates.
If you have a good record of being able to flip a house, you’re more likely to get a loan from a private money lender. They will likely care more about this than about your credit score.
The goal for the private money lender is to be protected. So they will want a mortgage on the property, ensuring their money is safe with a hard asset.
Why You Might Want a Private Money Loan
Real estate investors tend to look for private money lenders because they can assist with many aspects of investing. The two main uses of private money lenders for real estate investors is for buying a new property and refinancing a property.
If you’re looking to buy a new property, whether it’s residential or commercial, a private money loan could be perfect for you. If you’re an experienced investor, it’s best to showcase any past deals to prove your success in real estate.
If you have a property, but you want a different interest rate and are looking to refinance your property, a private money lender can potentially reduce the costs. As an investor, you may also be able to give profit shares to potential lenders. This could serve as an alternative to loan repayments.
How to Prepare for Your Private Money Loan
If you’re looking for a private lender specifically for real estate, it’s important to understand the basics of real estate loans. From there, you will need to network with lenders, prepare a portfolio, choose a lender and give a pitch.
Knowing the differences between private money lenders and hard money lenders will help you to understand these financial terms better.
A private investor might be someone you know who you’ve connected with socially, or it could be someone who you’ve met and wants to invest in your deal.
Hard money is private money, but a hard money lender is usually affiliated with a financial institution. They may have less strict requirements, but have higher interest rates.
A private money lender might be experienced in investing in real estate, so they will likely be highly informed when it comes to areas and prices. It will be important for you to be highly informed about real estate and the property you plan to either purchase or refinance. This will help you to build a successful relationship with the lender.
To prepare for networking and building your pitch, think about how the lender will get their money back, and what incentive they have to invest in your deal. Also, consider what risks the lender might be facing.
Start Networking Now
If you’re starting from scratch, networking should be your first priority. Start with the social circle you already have and spread that word that you’re looking for a private money lender.
Securing these loans are all about building relationships. So connecting with someone you know will help you in the process.
Attend events and other networking engagements to meet professionals in your industry and area. You will likely be able to network based on references.
If you know people in the real estate industry, like agents, attorneys, etc., these are good connections. But you should also contact people from other professional industries, like any friends and family who are looking for new investment opportunities.
Take the time to build positive relationships. Networking is mostly about mutual respect. Start building a strong investment network now in order to look for private money lenders.
Look for Local Lenders in Your Area
If you are having trouble with networking and connecting with professionals, you can start by looking up local lenders in the area. You can use data broker sites to see who is lending now.
For example, listsource.com will show you private loans, and lendingclub.com will show lenders who might be interested. Download these lists of private lenders and start collecting data. From there, you’ll need to start contacting them.
Check out our Orchard Funding loan for Fix & Flip that includes loans for both experienced and novice borrowers.
Try Cold Calling and Direct Mail
While cold calling may not be the most fun activity, it can actually generate results, especially if you’re struggling to find lenders you already know. You can find the phone numbers for these lenders from a simple Google search or using a site like WhitePages.com. Write out a script and start with general information about what you’re seeking.
Talk to the lender about their general business and build a rapport about the projects you’re working on, and what they’re working on. You could also discuss any other things you have in common, like sports, etc.
Along with cold calling, direct mail can be another effective way to contact potential lenders. If you’re able to pull a list of addresses from the information you have about these lenders, you can work from there to send direct mail.
Since these are previous lenders, you can write your letter starting with acknowledging the previous property that they lent on. You can then get into more detail about who you are and the real estate opportunity you have for new private money lenders.
Build trust by including more information about your track record in real estate and make sure to include your contact information. Let them know you’re looking for an information conversation to discuss this project.
Gather Your Materials
Hopefully one of your networking tactics has pulled in a few potential lenders. So at this point, you want to start gathering materials for your pitch.
You should have an overview, which includes more information about you, like your education, work history, goals and any past projects. Highlight any experience you have that will build trust with the potential lenders.
Your presentation should also have a visual element, like a video, that showcases any previous properties, along with the current property you’re discussing. Explain the success and use facts and figures to make your point. Also, emphasize your strengths and how you made your past projects successful.
You will also need other documents to present to investors, like insurance and a promissory note. So take the time to do your research and find out what is required. This will also help you to answer any questions they might have for you.
Make Your Pitch
Once you’ve prepared all your materials, you will need to focus on delivering your pitch. Make sure the meeting is relaxed and includes rapport. You will want to spend time making sure you and the lender feel comfortable with each other and understand the request.
Focus on your knowledge of the process, and walk the potential lender through each step. Answer questions along the way and take your time. It’s important that this doesn’t feel rushed, so that the lender knows they can trust you.
Make sure you understand all the important numbers, like profit and any dates and timelines that will be important. Think about these questions from their perspective and answer them with authority and confidence.
Follow These Tips to Find a Private Money Loan Near You
Securing a private money loan without a bank for your next real estate project can be done by following the steps above. Just remember to spend time not only learning about your potential lenders, but building a natural rapport that makes them feel comfortable.
Contact us to find out how Orchard Funding can help you secure a loan today!