What Is Transactional Funding

Find Private Money Lenders for Real Estate Investing

Private money lenders are a hot commodity for real estate investors, especially in this financial market, where funds for real estate are not readily available from conventional sources, but the available deals are better than ever before.

Let’s face it – you need cash ready to get the good deals out there. One of the most important things about raising private funds, whatever sources you use, is establishing relationships with your lenders. If you read the biography of real estate entrepreneurs, who made great fortunes and ventures in real estate, you find out that before even raising the first dollar, they established relationships and credibility.

The good thing about it is that you really don’t need your money or credit to work with private lenders: you need a solid plan, a professional attitude and determination.

This is a “to do” list how to raise money through private lenders the easy way:

Develop a business plan and/or executive summary – where your personal income or credit are not required. You need to present yourself, establish your credibility and show that you have done “your homework” on the subject property. An executive summary is divided in two parts – one part, which is your resume, your background and experience (this is updated from time to time, but not for each deal) and a part that changes for each property you are trying to raise money for.
Spy on the competition – find out where your competitors/real estate investors are getting their deals funded. Do an MLS search for cash sales in the last 6 months for the area that you are interested in investing. It will state property address, selling and listing agents and some times the buyer’s name (depending on the MLS system in your area.) With the property address information, just go to the Recorder of Deeds office and find out where the “cash” came from – if the cash did not come from the buyer’s bank account, it will be from a hard money or private lender. A lien and note will be on file, with the name and address of the private lender.
Spread the word – make a list of everyone you know who might have liquid funds, pension funds, IRAs, credit lines, etc. “Partner” with people who might have this information on different individuals: mortgage brokers, investment advisors, insurance agents, real estate agents, etc.
Host a free seminar – once you have a list of individuals who might have funds available, host a free seminar at a convention center or hotel meeting room. Be prepared with a business plan and sample executive summary explaining your vision and what you can offer them. Professionalism is a must.
Real estate syndication – organize the private lenders that want to work with you in a group, where you are the syndicator. Real estate syndication is where a group of people pool their money together with the purpose of funding real estate, long and short term. You make money as a syndicator/consultant, partnership arrangements and more, without using any of your money or credit.

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As I said, great fortunes in real estate have been made with real estate visionaries  who were able to present the project in a professional way and establish credibility. I have personally used real estate syndication and private funds (which I raised by following the steps outlined above) since 2001.

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