3 Critical Things You Must Know When Borrowing Private Money To Buy Real Estate

In my twelve years of experience in the real estate investing world I have found that people think raising private money is the hardest thing to do.  They would rather go to a bank or other conventional financing institutions just to get a ‘no’.  This can deflate any dream the prospective investor may have.  Their answer to this is usually I will work my 9-5 job and hope for the best.  My experience has shown it is best to be proactive.

I have found the most critical 3 things you want to keep in mind when raising private money.  Again this is taken from my own experience.

People Do Want to Lend Money

Despite what you are thinking in this crazy economic times we are in, people are always looking to put their money to work.  The most important factor is that the investor wants to know that their investment is secure.  In my experienced opinion I cannot find any other commodity more secure than real estate.

You Must Have Confidence

If you are like I used to be, I used to analyze how every scenario could or would go.  I had terms memorized, I would play mock scenarios over and over in my mind.  But when I got in front of my first investor I froze up.  Luckily I had a colleague that was on my side and put in a good word for me before I met that investor and he gave me some verbal xanax.  And yes he did end up lending me money, actually it was my first ‘fix and flip’.

Have a plan

I do not know of a single investor that will work with any real estate professional looking to borrow money no matter how seasoned they are if they do not have a plan.  You must have a business plan in place with your objective, a proposal and most importantly a plan on how you are going to pay your investor back.