Why Use Private Money For Real Estate Investing?

There are many reasons a real estate investor might want to have a ready access to private money for real estate investing. This article will explore a few of those reasons.

The first reason to use private money for real estate investing is to protect your credit rating. Think about this… if you borrow the money from a private individual, rather than a bank or lending institution, the loan will never be reported to the credit bureau. It won’t count against your debt-to-income ratio, and no record of the payment history will be kept. No one will ever know about that loan, unless you tell them.

Next, and one of the very best reasons to use private money for real estate investing, is the elimination of paperwork. I have never had to complete a loan application for private money for real estate investing. The lenders I work with all know me and the kind of investing I do. Many of them never even care to see the property. When I apply for a mortgage, on the other hand, the application process itself can take several days, and there are mountains of paper.

Yet another reason to use private money for real estate investing is the ready access to fast cash. Sometimes, when a deal is especially good, moving super-fast is a necessity. With bank financing, that kind of speed is often impossible. Even lines of credit don’t always give you the same speed capability that private lenders do. With one phone call to one of my private lenders, I can tie up a deal that other investors only dream about.

A great reason to use private money for real estate investing is the leverage that it gives you. Think about this… if you have $50,000 of your own money, is it better to pay all cash for a $50,000 property, or to put $50,000 cash down on a $500,000 property and use private lenders to finance the rest?

If you answered the $500,000 property, you’re right- and here’s why. Let’s say the $50,000 property rents for $500 per month, or $6,000 per year. Your Return On Investment (ROI would be 12% the first year ($6,000 divided by $50,000). It’s safe to assume the rent on the $500,000 property might be about 10 times that of the $50,000 property, or about $60,000 for the year. If your payback to your lender totals $4,000 per month, or $48,000 per year, what’s your Return On Investment (ROI) for the $500,000 property? If you answered 24%, give yourself a gold star!

Of course, you would need to take into account the cost of borrowing the money, but even after doing that, you can see there really is no comparison. Using private money for real estate investing gives you something called leverage. Leverage is the ability to move something very large with something very small… a lever. The lever, in this case, is your small amount of cash ($50,000). With it, you can “move” or control a $500,000 property, because the private lender’s money increases the power of your “lever”.

Here I’ve given you a few of the many great reasons for using private money for real estate investing. There are more, but you should have a clear picture of why private money can be so useful in your real estate investing toolkit. If you would like more information, I have written another article on my website titled Private Money For Real Estate Investing.

Now, go make more offers!

Why Use Private Money For Real Estate Investing? Limited Hassles and Paperwork!

The last time I went through the traditional mortgage application process I thought I would choke on the paperwork. The number of phone calls and faxes involved was ludicrous. I thought to myself ?There must be a better way.? The good news? there IS a better way, and it?s called private money for real estate investing.

When you initiate the process of applying for mortgage financing, you had best realize that you are unleashing a blizzard? a blizzard of forms, applications, faxes and phone calls back and forth with the lender. If you would prefer not spending countless hours in front of the copier, or with the phone receiver glued to your head, then consider the alternative of private money for real estate investing.

By developing a system of finding and using private money for real estate investing, you will enjoy the benefit of greatly reduced hassle and paperwork. The last private money loan I closed on involved exactly three phone calls and one meeting with my lender to sign a simple note. In fact, we had an enjoyable lunch together, so even that part was completely painless.

The simple fact is that when you develop your own group of lenders, all of whom stand ready to provide you with private money for real estate investing, you are creating freedom for yourself? freedom from the mind-numbing experience of applying for loans, proving you make what you say you make, apologizing for past credit mistakes, explaining gaps in employment, and begging for special dispensation.

Talk about a de-humanizing experience. Why would anyone willingly subject themselves to that, when there is a much better alternative?

The alternative is to apply just a little bit of effort and develop a group of consistent, loyal lenders to partner with. The great news is that when you make a decision to find and use private money for real estate investing there is a wealth of information available to you.

To start your research on finding and using private money for real estate investing try http://www.private-money-real-estate-investing.com.

Now, go make more offers!

Finding Private Money for Real Estate Investing - Expanded Circle

The first step to finding private money for real estate investing is to look at your own funds, like retirement and savings. Next, you want to find out if anyone in your family has funds they could loan you. I?ve already written articles on those two sources. Today, I want you to consider expanding your search radius.

A primary source of private money for real estate investing in my own experience has been friends, professional relationships, and casual contacts. These are the people you rub shoulders with day in and day out, and these are the people you should be prepared to talk to about real estate investing.

How can you prepare? Glad you asked.

These folks are the ones you will need to share your elevator speech with. What?s an elevator speech, you ask? I?ve have written another article entitled ?Private Money For Real Estate Investing ? Your Elevator Speech? that goes into great detail. You can find it elsewhere on this site? just look on my author page.

To recap, an elevator speech is a short, pithy explanation of your investing activities, as well as how and why you use private money for real estate investing. It?s not designed to tell them everything, only to give them a quick overview, and whet their appetite for more.

That?s why you also want to be prepared to close them on a follow-up appointment to share more information. Either a one-on-one, like a lunch, or a seminar setting will work. Either way, if possible you want to share your elevator speech, get them interested, and close the deal with an appointment to tell them more.

Who should you be looking for? Anyone and everyone you know and have regular contact with. Don?t pre-judge just because you think they have no money, or don?t believe they would be interested in loaning you private money for real estate investing.

Professionals like doctors, attorneys, and accountants often have money to loan, or know others who do. Ask for referrals. Don?t limit yourself to only professionals? your friends can be a good source of private money for real estate investing. People you see daily at the stores and businesses you frequent are also possibilities. In short, anyone you know and who knows you.

Starting the conversation is best accomplished with a question. ?You know Mike, I was wondering,? you say, ?have you ever considered getting involved in real estate investing?? This opens the door, now all you need to do is walk through it!

These are just a few ideas on finding private money for real estate investing. For much more try http://www.private-money-real-estate-investing.com.

Private Money for Real Estate Investing - Step One

If you want to create a pathway to an unlimited supply of private money for real estate investing, you need to build a foundation of trust with your prospective lenders. One of the very best ways to impress them, and show them you know where you?re going, is if you really DO know where you?re going.

As a lender, before I loan one penny of my hard earned private money for real estate investing, I ask to see one very important document? the investor’s business plan. If they have one, that?s a good sign; if I can read it, that?s a better sign; and if it clearly shows they know where they?re going, well? that?s a great sign.

What am I looking for? Well I?m NOT looking for flash or glitz. In fact, a business plan doesn?t need to be fancy, or even long for that matter. It does have to be clear, concise and simple enough for an eighth grader to read. Yes, I read at a higher level than an eighth grader, but some people looking to loan private money for real estate investing may not, so keep it simple.

How should you write your business plan? First, think about the kind of investing you have already been successful with. Ask yourself how you achieved the success, and what steps you took that are repeatable. List the steps, and create an outline. Do that and you have the perfect outline for your private money for real estate investing business plan.

There?s lots of material on the internet for creating winning business plans. I don?t need to repeat that here. The purpose of this article is to get you thinking about how you can and should create a business plan that appeals to potential lenders of private money for real estate investing.

That kind of business plan reveals in plain, simple language how you propose to make money with your investing, the kinds and sizes of the loans you will need, and most especially, how the LENDER will benefit? in other words, how much will they make, how will it be repaid, and how will their investment be secured?

That?s the kind of business plan that will appeal to those who might lend you private money for real estate investing. When you write that kind of business plan, it shows you have thought it through, and you know where you?re going and how to get there. It also show you know how to take your lender along for the ride.

That?s what a potential lender will be asking themselves as they read through your plan? ?What?s in it for me?? Remember that as you write, and write with them in mind, stressing benefits, benefits, benefits. Create a feeling of confidence in your prospective lenders as they read, so they feel confident loaning you private money for real estate investing.

Step one in your quest for private money for real estate investing? Develop a business plan.

Why Use Private Money For Real Estate Investing?

There are many reasons a real estate investor might want to have a ready access to private money for real estate investing. This article will explore a few of those reasons.

The first reason to use private money for real estate investing is to protect your credit rating. Think about this… if you borrow the money from a private individual, rather than a bank or lending institution, the loan will never be reported to the credit bureau. It won’t count against your debt-to-income ratio, and no record of the payment history will be kept. No one will ever know about that loan, unless you tell them.

Next, and one of the very best reasons to use private money for real estate investing, is the elimination of paperwork. I have never had to complete a loan application for private money for real estate investing. The lenders I work with all know me and the kind of investing I do. Many of them never even care to see the property. When I apply for a mortgage, on the other hand, the application process itself can take several days, and there are mountains of paper.

Yet another reason to use private money for real estate investing is the ready access to fast cash. Sometimes, when a deal is especially good, moving super-fast is a necessity. With bank financing, that kind of speed is often impossible. Even lines of credit don’t always give you the same speed capability that private lenders do. With one phone call to one of my private lenders, I can tie up a deal that other investors only dream about.

A great reason to use private money for real estate investing is the leverage that it gives you. Think about this… if you have $50,000 of your own money, is it better to pay all cash for a $50,000 property, or to put $50,000 cash down on a $500,000 property and use private lenders to finance the rest?

If you answered the $500,000 property, you’re right- and here’s why. Let’s say the $50,000 property rents for $500 per month, or $6,000 per year. Your Return On Investment (ROI would be 12% the first year ($6,000 divided by $50,000). It’s safe to assume the rent on the $500,000 property might be about 10 times that of the $50,000 property, or about $60,000 for the year. If your payback to your lender totals $4,000 per month, or $48,000 per year, what’s your Return On Investment (ROI) for the $500,000 property? If you answered 24%, give yourself a gold star!

Of course, you would need to take into account the cost of borrowing the money, but even after doing that, you can see there really is no comparison. Using private money for real estate investing gives you something called leverage. Leverage is the ability to move something very large with something very small… a lever. The lever, in this case, is your small amount of cash ($50,000). With it, you can “move” or control a $500,000 property, because the private lender’s money increases the power of your “lever”.

Here I’ve given you a few of the many great reasons for using private money for real estate investing. There are more, but you should have a clear picture of why private money can be so useful in your real estate investing toolkit. If you would like more information, I have written another article on my website titled Private Money For Real Estate Investing.

Now, go make more offers!

Finding Private Money For Real Estate Investing

Have you ever wished you had all the money you could use for all the deals you could possible handle? If you?ve been investing in real estate for long, you certainly have thought about how you could find private money for real estate investing. In this article I?ll attempt to give you some ideas for doing just that.

The first thing you should do in your search for private money for real estate investing is know what you want the money for. Since you?ll be talking to folks who will potentially loan you money, and they?ll be asking you questions, doesn?t it make sense to think through the answers to those questions ahead of time. Put your thoughts down on paper, and develop a written investing business plan.

Answer the questions lenders are most likely to ask? things like the type of property you invest in, how much money you?re likely to need, how much of your own money you?ll be using, how long you?ll need the money for, how you plan to pay it back, what rate of return can they count on, and so on. All of these things and more will be on your potential private lender?s mind. When you?re planning your approach for private money for real estate investing, you need to give these areas some thought.

One of the keys to finding private money for real estate investing is self-promotion. Don?t be shy about getting the word out that you?re looking for private money for real estate investing. Use all the same promotion tools you would use for other purposes. Classified ads, billboards, bandit signs, radio, TV, and promotional items like pens, hats, and magnets all make good ways of reaching your target audience. Let?s face it? you never know who?s got the money to lend, so you?ve got to get the message out to as many folks as possible.

Another key to finding all the private money for real estate investing you?ll ever need is planning and preparing a professional presentation. Put yourself in the place of a potential lender. What would you like to know in order to be comfortable loaning you money? How can you present your business plan in a professional yet persuasive way? What tools will impress and communicate effectively? Use everything at your disposal to put yourself and your investing business in the best possible light.

Presentation binders, handouts, flyers, and PowerPoint are all tools that have been used quite successfully by others looking for private money for real estate investing. Testimonials are especially powerful and effective. If someone has loaned you private money for real estate investing before, and you paid it back as agreed, ask them for a written testimony about the experience. Put their testimony into your presentation materials.

In fact, whenever you sign up a new private lender, ask them for a testimony about their experience. Finding private money for real estate investing doesn?t have to be a struggle. Use all or some of the tools in this article, and from a more in-depth article I?ve written called Private Money For Real Estate Investing. Then you?ll stand head-and-shoulders above the other investors in your area who?ll wish they had access to all the private money you do!

Now, go make more offers!

Private Money For Real Estate Investing - Why You Should Never Forget This Clause

When you use private money for real estate investing there are several clauses your lending agreements should never be without. One of those clauses is the ?No Pre-Payment Penalty? clause. Here?s how it works.

When you borrow private money for real estate investing, you?re accomplishing a great deal. You?re protecting your credit, and maximizing your borrowing potential, as well as gaining access to a ready and flexible source of money.

It would be a shame to go through all of that and leave yourself open to harm in one critical area? what if you?re stuck with a repayment term that?s too long?

The sure way to avoid this issue is to put a ?No Pre-Payment Penalty? clause in every private money for real estate investing agreement you make. That way, when you?re ready to pay the loan off and free up those funds for a new investment, you?re not stuck paying a hefty penalty.

Here?s how the clause should be worded.

?”The Borrower reserves the right to prepay this Note (in whole or in part) prior to the due date with no prepayment penalty”

Without this clause, you would be obligated to pay the lender the full interest due on the loan for the entire term, no matter how long it is. That?s not the kind of flexibility you want in a loan of this type, and flexibility is one of the main reasons to use private money for real estate investing.

Protect yourself and your borrowing capacity when you’re accessing private money for real estate investing by including the above clause in every one of your private notes and contracts. You?ll be glad you did.

Finding Private Money for Real Estate Investing - Expanded Circle

The first step to finding private money for real estate investing is to look at your own funds, like retirement and savings. Next, you want to find out if anyone in your family has funds they could loan you. I?ve already written articles on those two sources. Today, I want you to consider expanding your search radius.

A primary source of private money for real estate investing in my own experience has been friends, professional relationships, and casual contacts. These are the people you rub shoulders with day in and day out, and these are the people you should be prepared to talk to about real estate investing.

How can you prepare? Glad you asked.

These folks are the ones you will need to share your elevator speech with. What?s an elevator speech, you ask? I?ve have written another article entitled ?Private Money For Real Estate Investing ? Your Elevator Speech? that goes into great detail. You can find it elsewhere on this site? just look on my author page.

To recap, an elevator speech is a short, pithy explanation of your investing activities, as well as how and why you use private money for real estate investing. It?s not designed to tell them everything, only to give them a quick overview, and whet their appetite for more.

That?s why you also want to be prepared to close them on a follow-up appointment to share more information. Either a one-on-one, like a lunch, or a seminar setting will work. Either way, if possible you want to share your elevator speech, get them interested, and close the deal with an appointment to tell them more.

Who should you be looking for? Anyone and everyone you know and have regular contact with. Don?t pre-judge just because you think they have no money, or don?t believe they would be interested in loaning you private money for real estate investing.

Professionals like doctors, attorneys, and accountants often have money to loan, or know others who do. Ask for referrals. Don?t limit yourself to only professionals? your friends can be a good source of private money for real estate investing. People you see daily at the stores and businesses you frequent are also possibilities. In short, anyone you know and who knows you.

Starting the conversation is best accomplished with a question. ?You know Mike, I was wondering,? you say, ?have you ever considered getting involved in real estate investing?? This opens the door, now all you need to do is walk through it!

These are just a few ideas on finding private money for real estate investing. For much more try http://www.private-money-real-estate-investing.com.

Why Use Private Money For Real Estate Investing - Reason 2

You can’t judge a book by it’s cover, and you can’t judge a person by their credit score. Unfortunately banks, lenders and other financial institutions do exactly that, often using credit score as a sole determining factor in deciding whether to grant a new loan. Another great reason to use private money for real estate investing is that it won’t negatively impact your credit score. Why not? Read on to find out.

When you borrow money from private individuals, something very important does NOT happen. They do not pull your credit report. Therefore, no inquiry shows up the next time someone DOES pull your credit report. Inquiries can lower your score, and multiple inquiries can have a negative impact on your score and your overall credit picture.

How much of an impact? That depends on who’s reading the credit report, and which of the three reports they’re reading.

One this is certain? all other factors being equal, it’s far better to not have inquiries show up on your report. When you use private money for real estate investing, you avoid the automatic ?inquiry deduction? in your score, as well as the negative assumptions loan officers often make when they see multiple inquiries.

There are plenty of great reasons to use private money for real estate investing, and one of the best is that private lenders don’t pull credit. Of course, that doesn’t mean you NEVER want to pull your own credit report in order to show it to a potential lender, or even invite him to pull it himself. That can be a good strategy, especially when you’re in the process of trying to earn a new lender’s trust.

Once the relationship is established and you’ve paid back a loan or two, they should never need to pull your report again? something no institutional lender I’ve ever worked with has been willing to guarantee. You can see that using private money for real estate investing has some real advantages, one of which is preserving your credit by limiting the number of inquiries on your report.

Why use private money for real estate investing? Plenty of reasons! For more try http://www.private-money-real-estate-investing.com/why-private-money.html

Private Money for Real Estate Investing - Step One

If you want to create a pathway to an unlimited supply of private money for real estate investing, you need to build a foundation of trust with your prospective lenders. One of the very best ways to impress them, and show them you know where you?re going, is if you really DO know where you?re going.

As a lender, before I loan one penny of my hard earned private money for real estate investing, I ask to see one very important document? the investor’s business plan. If they have one, that?s a good sign; if I can read it, that?s a better sign; and if it clearly shows they know where they?re going, well? that?s a great sign.

What am I looking for? Well I?m NOT looking for flash or glitz. In fact, a business plan doesn?t need to be fancy, or even long for that matter. It does have to be clear, concise and simple enough for an eighth grader to read. Yes, I read at a higher level than an eighth grader, but some people looking to loan private money for real estate investing may not, so keep it simple.

How should you write your business plan? First, think about the kind of investing you have already been successful with. Ask yourself how you achieved the success, and what steps you took that are repeatable. List the steps, and create an outline. Do that and you have the perfect outline for your private money for real estate investing business plan.

There?s lots of material on the internet for creating winning business plans. I don?t need to repeat that here. The purpose of this article is to get you thinking about how you can and should create a business plan that appeals to potential lenders of private money for real estate investing.

That kind of business plan reveals in plain, simple language how you propose to make money with your investing, the kinds and sizes of the loans you will need, and most especially, how the LENDER will benefit? in other words, how much will they make, how will it be repaid, and how will their investment be secured?

That?s the kind of business plan that will appeal to those who might lend you private money for real estate investing. When you write that kind of business plan, it shows you have thought it through, and you know where you?re going and how to get there. It also show you know how to take your lender along for the ride.

That?s what a potential lender will be asking themselves as they read through your plan? ?What?s in it for me?? Remember that as you write, and write with them in mind, stressing benefits, benefits, benefits. Create a feeling of confidence in your prospective lenders as they read, so they feel confident loaning you private money for real estate investing.

Step one in your quest for private money for real estate investing? Develop a business plan.

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