Finding Private Investment Money

It seems like everyone is talking about buying real estate using private loans from private investors. I get three or four emails a week with some expensive seminar pitching how to find private money to fund your real estate deals. I don’t know about you, but I have problems going up to someone and saying, “Can I borrow money from you? I want to go buy some real estate.” I’d like to suggest an alternative way to find investors who want to work with you, one where private money starts to seek you out, rather than your having to seek it out.

A couple of days ago an investor friend called me up and asked, “Robert, I bought an investment property that I need a short 90-120 day loan to get my cash out so I can go buy another property while I sell this one. Would you be willing to make me a loan until the property sells and I can pay you back? I’d be willing to pay you 10% interest and one percentage point. Your LTV would be about 67%.” I asked him if he would be willing to pay an additional percentage point for every 30 days past his initial 90 days. This way I knew he would stay motivated to sell the property and I would quickly get my money back for my own deals. He readily agreed.

Now I had a problem, I didn’t have all of the money he needed available, but I more than trusted my investor friend enough to invite others to join me in the deal. I quickly called another friend and left him a message to call me back. He had recently come into a small amount of money and had it sitting in a low interest CD at the bank. He’s a little greedy, so I knew he would be interested at these terms. Within a couple of hours, he called me back and not only did he want in on the deal, but so did another friend of his. We combined our funds and created a single loan, we are protected by a first position deed of trust, and our loan has a 67% LTV. At the end of approximately five months, we’ll receive our funds back with the interest and points.

Here’s the best part, our yield will be approximately a 14.56% return. But also remember I didn’t have all of the money I needed to make the deal happen. The deal was so good, that one financial friend brought me another financial friend, and thus brought me a new private money lender. As they say, if the deal is good enough, the money will follow.

Robert Taylor is an active real estate investor and the author of the free newsletter Calculator Secrets – Unlocking the secrets to real estate financing, without doing any math”.

For more information, please visit, http://www.calculatorsecrets.com