It seems that just about every investor I talk to is looking for more money. Here’s a question that came up…

Question: “I want to buy a property, but I can’t get the money. What do you do when the banks won’t lend you money, and you don’t have cash to work with?”

Answer: “You don’t have to have bank financing to make this work – to buy real estate. One of my favorite way to buy cash flow properties is to use private money.
Find an individual who might be taking their money out of the stock market and wants to get a very good return. Think about it – it’s challenging right now for someone with, let say, $100,000 to invest it to get a 10 percent return. I challenge you to go out there and find that.
Investing in the stock market is just strictly hope because there is no way to know what’s going to happen. When the stock market is booming, there is no way to know what the market is going to do. Same thing when the market is down.
You just put in your money and then hope. All you’re doing is hoping.
And what about those people who are earning 2% on their CDs at the bank? To them, a 10% return sounds too good to be true.
If you are a retired person, and you have your money in CDs, you are not happy with the return you are getting because that’s the money you have to live on.
I’m certainly looking for anyone with money. I’m not doing direct marketing (sending out letters and postcard) to find them, but I’m certainly looking for them all the time, keep my eyes and ears open.
The best kind of marketing in that sense is just talking to people. Just talking to the people in your circle, you know and let them know.
But put yourself in the position of the private lender if they loan you money to buy real estate. If they invest in a mortgage you create in the process of buying a piece of real estate, your private lender knows exactly what they are going to get. It’s a much more predictable way you can get a pretty good rate of return.
I encouraged my friends with money to consider investing in first mortgages secured by real estate, whether they are lending money to me or to somebody else.
When you as a real estate investor have access to private money, it just totally changes things. You don’t wonder where your money will come from. Your focus changes to how you can use the money. That means the questions that you ask yourself on a habitual basis will change. That means your results are going to change. It becomes a matter of what kind of deals you want to go after. It will change your business, just like it changed mine.
Are you using money from the bank now? There are times when the banks tighten their standards. During those times, they might stop lending to you. That’s where private money can save the day for you.
Do you have a question about private money? Write a comment…