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…
June 10th, 2011 at 5:33 am
We are a private firm of real estate agents we had a loan on our freehold from Barclays. the premises is worth 1 million our loan we had was for £450 K Most of the premises is let out with an income of £1900 pcm. The lower half of the premises we use ourselves to generate an income from.
During hard times We missed a few payments with barclays for our loan due to the recession so they wanted to re-adjust our loan, we agreed but when we applied for a re-adjustment they realised our credit rating was not good enough to agree a new loan so declined it, then they decided and sent us out a foreclosure letter this was 3 years ago, with no offer of help etc the reason we got into problem in the first place was their excruciation penalties which mean’t we could not pay back arrears and it snowballed, we have managed to pacify them for a while paying back £1900 pcm on an informal verbal arrangement but they had not formed any new agreement and we remained vulnerable, (they have never sent us statements or anything since the letter of foreclosure to show how the money is paying back the loan or what we assume they are paying off the overdraft we had first then working through the loans but don’t know as we get no paperwork, we tried to sell the apartments that generated the income but found by selling the upper part of the premises we could only raise around 300K not only that but we needed their authority to split title which was not forthcoming, as the majority of the worth was in the basement premises which we trade out of; we needed to keep theses as we would have not trade and no business they it is ridiculous to do this to us as it would bankrupt us as we would have to sell investment properties also generating an income but then would be faced with capital gains tax on properties already re mortgaged to release capital to keep us afloat during the last 3 years, business has picked up now and we really dont need this,we have assets I am sure if we sold all we could raise the money but would have no home investments or business which would make 10 people unemployed, (thanks Barclays) we dont want to have to sell them as we know we would never recoup anything again having bad credit rating now (what happened to the days when the bank manager just loaned money to his clients without PCS interfering with their flat criteria for lending with no leeway) is there anything you can think of that we can do to force their arm not to foreclose on us? I don’t understand why just because a pc says they cannot form a new loan they cannot override this in any way there needs to be leniency and common sense sometime sin lending surely?.We have been paying this informal arrangement for 2 years why can they not just keep to this?