Private Lenders: Where to Find the Money
Lance T. Walker, letsdodeals.net

There's no substitute for cash in real estate investing, for lots of
reasons. In fact, the more deals you're involved in, the more you'll
need access to cash - for operating expenses, deposits, down
payments, covering vacancies and utilities, remodeling costs, and
even closing costs.

But what if you're starting out or just don't have any money? Are you
out of the game? Absolutely not. What you need is the know-how
and the confidence to establish relationships and track records with
private lenders. Not hard money, but true private lenders. They're the
best-kept secret in real estate.

See, smart investors don't go near banks to fund their deals. They also
don't use their own cash or credit. They get all the money they want
from individuals....and get it faster and easier, with no limits on how
much they can borrow.

The private money you're looking for is lower cost with no points, is for
relatively long terms - typically 2 to 5 years, puts you in direct contact
with the lender in order to build relationships and gain referrals, and
allows maximum flexibility within the agreement if the need arises.

By contrast, hard money costs more in points, carries higher interest
rates, is short term (usually for only 6-12 month periods), often doesn't
allow for direct contact with the lender, and usually has more rigid terms -
especially if arranged through a mortgage broker.

Although they have their place, the high cost of hard money loans, coupled
with the need to repay them quickly, can often turn you into a motivated seller
yourself - causing you to accept a less profitable deal than you otherwise
would if you could afford to wait. (Hint: that's why they call it hard money.)

Where to find the cash
Private lenders are simply individuals that have money to invest and
want better returns than they are currently getting. They are amazingly
abundant, and they mainly fall into four groups:

• Your inner circle - small business owners, coworkers, friends,
and relatives,

• Busy professionals - doctors, dentists, attorneys, accountants,
insurance agents, and others with high incomes and very little time
available to manage their investments,

• People with lots of idle assets - IRAs, home equity, or cash, and

• Professional investors - the best source because they don't require
educating, and they can recognize a good deal quickly.

Locate these people through advertising, direct mail, referrals, courthouse
research, the yellow pages, the Chamber of Commerce, or even your local
real estate investor club (if you can get someone to share their names with
you. But be prepared, most won't.)

It's good to have more than one private lender in your pipeline, as they may
become fully invested and temporarily unavailable to you. Do your homework,
and show yourself to be knowledgeable about the things that matter to lenders.

Handle as many of the details - choosing a title agent, providing documents,
exit strategy, etc. - as you can, in order to make it as easy as possible for
your lender to say 'yes' to your proposal.

Alan Cowgill is an investor who's made finding private money his specialty. You can
find a home study system, along with lots of information from heavy hitters like Ron Legrand, Lou Brown, and Kathy Kennebrook, here .

Tip: Start in the 50K-to-200K range. Your lender won't be much interested in
anything under 50K because the amount of interest to be earned isn't worth
the effort. If you only need 10k to 35K to complete a deal, try finding a second
deal and combining the two into one blanket loan.

-- Lance T. Walker publishes online regularly at "letsdodeals.net: Helping you create a wealth-based retirement with an e-powered real estate investing business." Free report, "Dare to Double Your Income - Even During a Recession", available online at millennium-wealth-system.com.