[box] Welcome to the fourth post in our “Featured Tool of the Month” series! Follow us as we break down our software, pixel by pixel. Today’s post focuses on Private Lenders.[/box]
Last week’s blog post covered the value of Bankruptcy, Tax Lien, Upside Down, and Low Equity leads.
When looking for motivated sellers, targeting these lead-types can create great investing opportunities. Mediocre deals become killer deals when you negotiate with motivated sellers under the right set of circumstances.
This week’s post focuses on one of the most valuable lead types in real estate investing…
Anyone who is in a position to lend money to a company or an individual is considered a Private Lender. Private Lenders are out there, and they’re eager to make a large return on their money, more than they would by letting it sit in a savings account.
Private lenders are valuable for young real estate investors, and are oftentimes the big push that gets their business up and running.
Why is raising Private Money so important?
Access to private money allows you to move quickly and negotiate great deals that you wouldn’t otherwise be able to do if you had to rely on traditional bank financing.
Access to private money gives you the flexibility and speed to get the best deals done more quickly. You gain the control that your business was lacking and you avoid paying unnecessary fees. Working with Private Lenders will eliminate the burden of a financial obstacle and allow you to focus on the next course of action once you’ve secured a piece of real estate.
It also gives you the flexibility to decide with your Private Lender what the return will be on the money that they invest with you. As you develop relationships with your Private Lenders, they will become more enthusiastic about lending you money with every deal, assuming that you pay them back in the terms and time frame that was agreed upon.
Unlike the stock market, CD’s, and typical savings accounts, a Private Lender’s investment is backed by real estate and can return a much higher rate on their money. Private Lenders can even use retirement accounts for lending private money.
You should provide Private Lenders with the following to protect their interests:
- Promissory Note – a contract that outlines the terms that you agree on.
- Deed of Trust – A deed secures the private lender’s investment to the property and will allow them to foreclose if payments are not made on the property.
- Hazard Insurance – This gives your lender an added layer of security by adding them as additional insured.
Private Lenders are out there and are more than willing to provide that financial cushion to assist with your investing.
Why do Private Lenders want to lend their money to you?
Private Lenders are interested in building their wealth and a real estate investor can typically offer a return on a Private Lender’s money that is larger than what they’re getting in CD’s, stocks, mutual funds, bonds, and savings accounts.
It’s also a more secure way to build wealth more quickly, whereas investing in the stock market, CD’s, or a savings account can be slow and can result in breaking even or even losing money – a lot of money.
If you want to download a list of potential Private Lenders in your area, make sure you should check out Realeflow’s Leadpipes Feature.
In seconds, you can target and download hundreds of Private Lenders and drop them into a marketing campaign with just a few clicks.
Be sure to let me know what you think by leaving a comment below!