Private Lender, Angel Investor – What? I need money to invest!

As a leader of a real estate investment association in Kansas City and an investor who does a bit of marketing for private lenders, I get calls on a very regular basis from people who want to know

“Who are the Private Investors? Where do I find them?”
I am sorry to burst their bubble, but Private Lenders, Private Investors, Angel Investors, Silent Partners are not out there advertising for people to lend money to, the people who do that are called BANKS. And you can’t call up a local investor or association to find out who the private people would be, or then they would not be private, but possibly a rehab loan company  or maybe a Hedge fund.
If you are looking for a company that offers funds for investing commercially, you might do an internet search online for a few terms like:
·         Rehab Lenders
·         Transactional Funding
·         Hard Money Loans
There are a few companies or rather web sites out there that are go betweens for angel investors, but I have not found them to be very effective.
But if you are looking for that true, private investor, they don’t just fall into your lap, you have to do a bit of work to find them, to win them over, and then set up a deal with them.
So here’s the big secret with private investors, the steps to success if you will:
1.        You have to do a few deals, sorry, but most people are not going to trust you with any kind of money until you have done some deals, unless you are very highly trustworthy, and have an income to pay off the loan from the private investor, even if the deal goes south.
So as you do deals, keep a record, all the facts and figures on each and every deal, it will come in handy later.
2.       Be sure to be a little bit of a bragger, “yea, I just closed another deal and made $2,000” or what ever. When friends and family see you are making money, they always want to get involved – there’s your next private lenders.
3.       Get all the needed forms and documents to secure a private loan against your next property. Talk to your attorney or title company and they can set you up.
4.       Write down your elevator speech and practice it.
5.       Create a presentation showing how it works and example deals
6.       Then let everyone you know that you invest in real estate and ask people if they might be interested in investing by becoming a lender for you!
It’s not really a hard job to find private lenders, but it is time consuming and you have to be prospecting for lenders all the time. Go to the ball game, talk to the guy next to you. On the plane, talk to your seat mate. At the dentist, talk her up. At the bar, talk to the bartender and the people around you.
Everyone , everywhere is your potential private lender. There is no magic list of these private lenders, they are all around you, and you have to be working all the time you are out in public, networking online, or talking on the phone – you never know who will be the magic guy or gal that makes all the deals happen.