Raising Private Money
Where to Find Private Lenders (Online and Offline Tactics That Work)
Raising Private Money is a digital real estate investing guide priced at $29.95 that provides strategies for securing financing from private sources. It explains how private money differs from hard money and traditional bank loans, why investors opt for it over using their own funds, and the most common transactional uses—such as fix-and-flips, earnest money, gap financing, refinancing, and more. The product page is supported by a set of Frequently Asked Questions that clarify these concepts.
Frequently Asked Question
1. What exactly is private money, and how is it different from hard money or traditional bank loans?
Private money is typically borrowed from friends and family members. It is loaned based on the borrower’s credibility rather than strict financial guidelines that conventional lenders legally require. Hard money lenders, likewise, have strict requirements but are not regulated by the Fed as are conventional lenders.
Investors choose private money over bank loans because of the time, cost, and qualification process that it takes to get a bank loan. Investors seldom use their own money because they create leverage and ensure their liquidity by using Other People’s Money (“OPM”).
The primary uses for private money are for fix and flip rehabs, avoid the costs of hard money loans, avoid the time and expenses of getting conventional financing, down payments, Earnest Money Deposits, GAP financing, refinancing of existing loans, developing SFH or rental projects, and the cash needed for foreclosure or tax deed sales.
The most important terms to borrow private money are the interest rate, term of the loan, and payment type – interest only or principal and interest monthly, whether a personal guarantee or cross-collateralization is required, how soon is the money available, whether the lender has to approve the project or trusts your ability to make it happen, what documentation the lender requires.
The hazards of borrowing private money are that if the project goes bad for whatever reason, you will be blamed and likely sued. There may be state or Federal loan violations that you may not have been aware of, loss of the relationship with the lender, and overleveraging your project because of the ease of borrowing money.
Angel investors are professional investors, not private lenders, and usually require a substantial equity or partnership participation in the transaction. These are sophisticated individuals with lots of capital which is often borrowed from private lenders.
True private lenders do not worry about credit history or the amount of money the borrower has. They rather depend on the credibility of the borrower and whether they can trust him. This can lead to abuse, so be careful that you don’t mislead the potential lender as his/her funds can set you free.
The first individuals to approach are friends and family members, even if you don’t think they have the amount of money you need. Your secondary source should be professionals who have investable funds but no time or tenacity to do it themselves, especially doctors, dentists, and even lawyers. A huge source of private money is from retirement plans (401Ks and IRAs), but only self-directed ones.
The simple answer is ‘Yes’, as it is by exception of state and Federal laws. This is important, even if your project is successful. In my text, “Raising Unlimited Private Money”, I stress that you become familiar with what you can and cannot do, especially with advertising and co-mingling of funds. Your best friend is full disclosure in writing to your lender of what can go wrong in your deal before it happens!
It’s essential that you prepare before making any presentation to a prospective lender. I have developed a 30 FAQ list, with answers that an investor can either expect to be asked, or that he should answer even if not asked. Preparation and then presentation are critical – practice, practice, and practice before you present.
Only $29.95 !
Meet some students and see what they have to say.
Dave Dinkel is simply the best Mentor I have encountered. He always comes through, his body of knowledge is unmatched in the real estate industry. Every time I come across a difficult situation I consult with him.
Ivone Rosales
Dave is the Best!! He is the most knowledgeable Real Estate Investing teacher out there. He’s been investing since Jimmy Carter (or was it Ford-LOL) was in office and has more experience in the real world than 99% of all others. Dave is a very caring and patient teacher and is interested in your success.
Bill King
My wife and I started Dave’s mentoring program last July 2015. For anyone serious about real estate investing this is the only program I recommend. Dave is always there if you have any questions and if he doesn’t answer right away, he will call you back as soon as he can!
Godfrey Bethel
I’m in the South Florida market and I’m one of Dave’s mentors and I absolutely vouch for the program. Information is accurate but more importantly in my opinion is Implementation. That’s where the real value lies. On my first deal, Dave offered to conference in on the phone with me and the seller. I can go by the office any time and the program has helped to sell each one of my 6 deals. It’s an excellent program.
Calvin Thurston
Frequently Asked Question
1. What exactly is private money, and how is it different from hard money or traditional bank loans?
Private money is typically borrowed from friends and family members. It is loaned based on the borrower’s credibility rather than strict financial guidelines that conventional lenders legally require. Hard money lenders, likewise, have strict requirements but are not regulated by the Fed as are conventional lenders.
Investors choose private money over bank loans because of the time, cost, and qualification process that it takes to get a bank loan. Investors seldom use their own money because they create leverage and ensure their liquidity by using Other People’s Money (“OPM”).
The primary uses for private money are for fix and flip rehabs, avoid the costs of hard money loans, avoid the time and expenses of getting conventional financing, down payments, Earnest Money Deposits, GAP financing, refinancing of existing loans, developing SFH or rental projects, and the cash needed for foreclosure or tax deed sales.
The most important terms to borrow private money are the interest rate, term of the loan, and payment type – interest only or principal and interest monthly, whether a personal guarantee or cross-collateralization is required, how soon is the money available, whether the lender has to approve the project or trusts your ability to make it happen, what documentation the lender requires.
The hazards of borrowing private money are that if the project goes bad for whatever reason, you will be blamed and likely sued. There may be state or Federal loan violations that you may not have been aware of, loss of the relationship with the lender, and overleveraging your project because of the ease of borrowing money.
Angel investors are professional investors, not private lenders, and usually require a substantial equity or partnership participation in the transaction. These are sophisticated individuals with lots of capital which is often borrowed from private lenders.
True private lenders do not worry about credit history or the amount of money the borrower has. They rather depend on the credibility of the borrower and whether they can trust him. This can lead to abuse, so be careful that you don’t mislead the potential lender as his/her funds can set you free.
The first individuals to approach are friends and family members, even if you don’t think they have the amount of money you need. Your secondary source should be professionals who have investable funds but no time or tenacity to do it themselves, especially doctors, dentists, and even lawyers. A huge source of private money is from retirement plans (401Ks and IRAs), but only self-directed ones.
The simple answer is ‘Yes’, as it is by exception of state and Federal laws. This is important, even if your project is successful. In my text, “Raising Unlimited Private Money”, I stress that you become familiar with what you can and cannot do, especially with advertising and co-mingling of funds. Your best friend is full disclosure in writing to your lender of what can go wrong in your deal before it happens!
It’s essential that you prepare before making any presentation to a prospective lender. I have developed a 30 FAQ list, with answers that an investor can either expect to be asked, or that he should answer even if not asked. Preparation and then presentation are critical – practice, practice, and practice before you present.
