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Private Money Lenders - How To Find and Market To Private Money Lenders

Aug 22, 2008
As I've said before, every business on the planet is in the business of MARKETING.

Yes, that includes you.

First and foremost you are a marketer, second you are an investor. You must know how to get leads in order to even have a chance to put your investment knowledge into action.

So, to get private money lenders for your real estate investing business you must find the people who have money.

Who Has Money?

* Your Family and Friends -

Do you have family members who have money that they are earning between 0-5% on? I'm sure you do. Do you think they would want to double the rate of return on their money? I bet they would.

So, why not bring the opportunity of becoming a private lender for your real estate business to your family members first, so you can help your family become more wealthy in the process? Many people hate to ask family members for money... this is a common thing; however, why would you feel uncomfortable helping your family members make more money? You shouldn't.

The first property I bought (and still own) was bought with 100% private money. A 95% first mortgage (seller carried), and a 5% second which was borrowed from my father. My father is earning 6% on his money rather than 3%, the property cash flows and has gone up in value... if for some reason I screw up and don't pay my dad (not going to happen), he is in 2nd position on a property with over $100k in equity. It is a no lose for him... and great upside for me.

* Other Real Estate Investors and Businessmen -

Other successful real estate investors have money... and often like to lend out their money to other investors. These are often great private money investors to have on your side because as you're starting out, they can help you analyze deals... and teach you a ton as you grow as an investor. Also, successful businessmen are great because they know the security that real estate can hold, and know that when the loan is structured correctly they are protected with very little downside.

Talk to other investors and business people that you know and let them know what you do, and that you can provide them real estate secured returns of 9-12% (or whatever you are willing to pay) when they become a private money lender for your company. If there are holes in your presentation or your business model, they'll likely point them out, which will help you to make your business stronger over time.

* People Nearing or in Retirement -

Think about it... who has a bunch of money just sitting around? Well, people either in or nearing retirement (people 10-15 years away from retirement, up to people who are already retired). Even better, the stock market today sucks and I've personally seen many people move their money from the volatile stock market and place the funds in "more secure" investments like CD's, gold, etc.

It's your job to find these people and present them another option to lend money to your company for a much better annual return (usually private money lenders are paid between 8-12%). Show them that you know what the heck you are doing, that the risk is relatively low with the strict buying guidelines your company employs, and that you are looking for long term relationships with lenders who want the same.

These people can move their under performing investments (401k, IRA, etc.) into your short term private money loans. It's a win-win. Again, you as the investor need to be honest with the private money lender, and you need to make responsible decisions on the properties that you invest in.

That's just a short list of people who you should be going after to recruit as private money lenders for your real estate investing business.

Marketing to these people can be everything from simply handing them your business card that has a blurb saying you are looking for private money lenders who want to earn 10% secured by real estate, and to call XXX-XXX-XXXX or visit www.yoursite.com for more information

... to sending out mailers to a list of retirees... to teaming up with a financial planner, to putting on free seminars about the opportunity, etc.

***FYI, I am not an attorney, and don't claim to be. I am just throwing out ways you may be able to market to potential private money lenders, to my knowledge they are legal, but advise your attorney before you use any of them.***

Here are a few ways you can get in touch with potential private money lenders:

* Ask sellers of the properties you buy if they'd be interested in becoming a lender for your company
* Talk to family about the opportunity and ensure to structure the deal so they virtually can't lose, and that the risk is on you (unless you want to lose a family member if a deal goes south)
* Ask other investors at real estate investing clubs in your area
* Put up a website and get it optimized in the search engines (we're creating a training session on this)
* Network at events (chamber of commerce, etc.) and let people know what you do, and how they can be involved
* Send out postcards to a list of people with over $500,000 net worth (you can buy lists from companies who can break it down by net worth and other factors)

Really, there are endless ways to recruit potential private money lenders; however, in my experience... the best ways are to network, let people in your area know what you do, create a website which educates potential lenders, and get referrals from happy investors.
About the Author
Hey, my name is Trevor Mauch and I'm the founder of The REI Brain (www.thereibrain.com)and a real estate investor since the age of 21. Right now, my focus in real estate investing is multi-family income properties and I have plans on moving more into the commercial real estate investment world in 2008 and beyond. Grab your free real estate investing newsletter for more honest, unbiased, and actionable REI information.
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