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5 Potent Places You Can Find Private Money Lenders

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waldoHey guys, Patrick Riddle here, and I’m super stoked to have been asked back again to share some great REI info with you awesome Moguls.

In my 10+ years as a real estate investor, I’ve secured millions of dollars in private money from various people. Having done this successfully for a while now, I know where to find private money lenders and how to build those relationships, so they’ll wanna jump at your deals and loan you money.

Let’s get the basics out of the way first…

Private funding is something that REIs use to get their deals closed, either short or long term. Private lenders are a terrific source of funding.

The funding comes from an individual with deep pockets who is likely not getting a good enough return on their money they’ve invested elsewhere, like the stock market for example. So you’ll work to establish a great working partnership with a Sugar Daddy or Mama, and provide them opportunities for better returns on their cash.

But the one thing I’ve realized is that it can be challenging for REIs to think of places where they can seek out and connect with private money lenders.

So, I’m going to share with you a handful of places to look to start building those critical relationships that will produce high-impact results…

1. Charitable Events

Why, you ask? Well, oftentimes people who have a lot of money frequent these events, and they’re generally also good-hearted people who are giving their money away. So who better to become your private lender? Head to some philanthropic events to do some networking and build some relationships.

Think about this for a minute… when you bring in a private lender with deep pockets, they may be all you need for your future deals.

Or, how about this… that one contact could be all you need to gain leverage into their circle of influence to acquire all the private money you need.

So, where do you find these events? Check your local paper where events like this are usually listed.

bni2. BNI (Business Network International)

This one’s big! BNI is the largest business networking organization in the world. It’s basically a referral leads group that operates worldwide including each of the 50 states in the US, so you should be able to find a local chapter in your area.

Here’s the thing though, they only let one business person from each niche industry into a BNI chapter meeting - one realtor, one mortgage broker, one insurance agent, one legal professional, etc.

Basically, when you join the group and become a member, you’ll attend the meetings simply to network and share referral leads.

When you go to a meeting and you are the only real estate investor there, you’ll most likely meet people who know others who are unhappy or unsatisfied with their current investment returns and are looking for leads for potential private lenders – those are the kind of leads your entire BNI group is going to be referring over to you.

So you’ve got a whole group of people who are thinking about who they can refer to you as a private lender.

I know a guy who’s actually gotten three private lenders from his local BNI group. Check out the site to find a local chapter and get to it!

3. Country Clubs

Consider becoming a member of your local country club. Why? Because usually, people who are members are wealthy.

So, join a club and start meeting and talking with other members. Focus on bringing one club member to your private lending program; provide them a great investing experience; pay them a good rate of return; and get a referral from them.

The thing about country clubs is that word spreads fast, and you’ll hopefully create a domino effect that will send private money lenders coming at you fast, with cash, which is a beautiful thing!

4) Self-Directed IRA Custodians

Of course, you know that a traditional IRA is a retirement account. A self-directed IRA is a specific type of retirement account where the individual has the ability to choose (self-direct) where the money is invested. This provides a level of control for the investor, if they are knowledgeable enough to do that appropriately.

Now, a custodian is a company that is required to help facilitate those transactions, such as Entrust or Pensco.

So, who are customers of self-directed IRAs? They are people with money who are specifically looking for real estate investments – so why not try to get your message in front of those people.

blogHow? All custodians have some kind of company newsletter or bulletin board that they send out to all their customers… so you want to advertise there!

Your message could be something as simple as: “Learn how to get 8%-10% return on your investing dollars secured by real estate. Concise, free presentation shows you how it's done.”

There is a cautionary note though… you need to be aware of not violating SEC regulations with your ad, which require that you only start to establish a relationship and begin educating them the first few times you interact or contact them. You are not allowed to present specific deals for investment opportunities until you have a well-established relationship. Get to know ‘em, then later hit ‘em with deal details.

5) Your Local Investor-Friendly Title Company

As an investor, you should already be connected to a title company or two or three for that matter.

Simply ask your closing attorney or closing coordinator who they know who’s already lending private money to other investors. And ask if they would be willing to make a warm introduction.

This tactic is best used when you already have some history with the closer and a good level of trust. If the referral ends up in bringing in great deals, that’ll make the closer look great. A win/win/win all around!

Bottom Line – Think Outside the Box

Networking can be your primary strategy for getting private money, and utilizing these five potent places really can help bring in those private money lenders.

Ask yourself, “How can I intentionally put myself in places where I'm consistently interacting with the right people who typically fit the profile of a private money lender prospect?”

And of course, be sure to have your concise “elevator pitch” memorized and at the ready. Now, go forth and network!


Do It To It! Immediate Action Steps

Understand Private Lending – Money from private lenders is a go-to source for funding REI deals. You need to know that private lending is worth more than face-value. It could be a goldmine for many of your deals to come.

Attend Charity Events - These events tend to draw people with deep pockets. Often connecting with these people can be a catalyst for connecting with their circle of influence (also with deep pockets). Look for these events in the newspaper.

Join Your Local BNI Chapter – Become the one REI in your local referral leads group chapter and network ‘til you’re blue in the face, sharing leads and mutual back scratching.

Join a Local Country Club – Grab your Polo and gear up to network at the watering hole of people with deep pockets. The great thing about networking here, is that you may not only find private lenders, but also possible buyers of your properties too. Twofer!

Advertise with Self-Directed IRA Companies – Place a short and to-the-point ad in the newsletter that gets blasted to all the company’s clients. Get ready for your networking plane to take flight!

Network Through Your Local Title Company Rep. – Ask a closing attorney or coordinator, with whom you are on good terms, if they’d introduce you to other investors. It’s that simple.

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