If you spend much time online, you’ve most likely read or heard about the law of attraction. Essentially, this law states that you tend to attract into your life whatever you focus on. I personally think the philosophy that’s risen up surrounding this so-called “law” is just so much drivel, but there is truth to the central idea. Which brings us to step two for getting private money for real estate investing.
As in most other areas of life, if you don’t know what you’re looking for, neither will anyone else. That’s why it’s important to think carefully about what you’ll be expecting from your lenders once you sign them up. Ask some pertinent questions, write down the answers, and develop a “Lender Fact Sheet” to give to your prospective private money lenders. Here are some of the questions you should be asking.
1. What size loans will you be looking for? This will be dictated by the type of property you normally buy. If you focus on single family homes in the $75,000 to $150,000 range, then loans up to $150,000 are what you’ll be seeking.
2. What will the terms be? Think carefully about how you will want to pay your loans back. This will, of course, change as you get into the mechanics of each individual loan and each individual property, but your prospective lenders will want to know what your intentions are. Do you plan to use the money for three years, five years, ten years? Will you make interest only payments with a balloon at the end of the term? The terms are limited only by your own creativity, but think about them now, and add them to your outline.
3. What rate will you be paying? A good rate of return compared with what they can earn elsewhere is what will attract your potential private money for real estate investing lenders. The rate you choose is up to you, and will be negotiable based on market conditions, but you should give your prospects a starting figure. Ten percent, eleven percent, twelve percent? Be prepared to make adjustments, but have a place to start.
4. How often? What will be your approximate frequency of use? Lenders want to know that they have a reasonable expectation of return. Don’t sign them up if you can’t use their money, because you’ll just be setting them up for disappointment. Only sign up as many lenders as you can reasonably expect to actually use.
As you think through these questions, others may occur to you. Write them down, along with the answers. Then, use your outline to develop your Lender Fact Sheet. Give this sheet to your prospective private money lenders at your seminars or one-on-one presentations, and be prepared to explain your terms.
If you want more on how to get private money for real estate investing , visit http://www.private-money-real-estate-investing.com for tips, techniques, and strategies.
Tom Dunn is a successful real estate investor and author of the popular DealFiles Real Estate Investor Stories free newsletter. You are welcome to share this report, unedited and in it's entirety, with anyone you like. You may not remove this text. © 2007 by Tom Dunn.