By now, most real estate investors recognize the face value of private lenders: access to lots of cash to buy deals on very favorable terms.
It’s not until you build a private lender portfolio and really start putting the funds to use that you realize the full potential and value.
These are some of my personal experiences with private lenders…
EITHER: An agent was putting up his For Sale sign on a property in my target area just as I was passing by. I asked the price and unbelievably…it was significantly lower than anything I had bought in the area. I offered full price – CASH with closing in 5 days. I knew I had a private lender available so I made a great offer before anyone could rob me and the bank accepted!
Too much benefit: Big problem to have – right? With this property, I was making so much money on this wholesale deal that I had to hide it from both my buyer and seller. I talked to one of my private lenders and borrowed the money for just 1 day. I gave her great performance in 1 day of use and made her very happy to be my private lender. His money allowed me to close on the property and resell it that afternoon to my investor buyer without ever disclosing what I paid.
2 days to auction: I had been working with a seller before the foreclosure. He was sure that he could do something else before the auction. I finally gave up on him. 2 days before the house he was scheduled to go to court steps calls and wants to know if I can buy the house from him and stop the foreclosure. I said yes, but could no longer offer the same price. He didn’t care. I called one of my private lenders and had the money transferred to my attorney’s escrow account the next day for closing. We beat the clock! I sold the property wholesale 2 weeks later!
Lack of rehabilitation funds: As sometimes happens, one of my rehabs had some unexpected cost overruns. I didn’t panic. I just contacted one of my smaller private lenders and got a small loan to cover the shortfall.
No Monthly Payments: Most private lenders, especially when using your IRA to make loans, are happy to receive a higher interest rate in lieu of monthly payments. I set up my rehabs where I have no monthly payments and increased all payments to the end and used the proceeds from the sale to pay down the debt. Imagine never worrying about your monthly rehab payments!
Just a call away: One of the things I love about private loans is how easy it is to process the loans. No long applications. No subscription. No last minute surprises. I simply call one of my private lenders; review the project in 5 minutes, send an Executive Summary of the numbers and that’s it. Approval is granted and money is available the next day if needed.
I can’t even begin to understand trying to run a real estate business without having private lenders. Second only to your customers; they are probably your most valuable resource. The beauty is that they are everywhere around you. All you have to do is start asking!
expect abundance,
louis castillo