What is a private lender? A private lender can be a relative, friend, or even your own company. You are going to be the best terms, rates and have the largest lines by using private lenders. Most of the private lending is trust based. If you know people, or are willing to meet the right people, you can get loans without banks. Typical rates for a private lender range for 0% to 12% depending on many factors.

Who Makes a Good Lender

You might make a good lender. If your friend needs $1000 and agrees to give you your money back in the next few months, and also promises to help cut your grass the whole summer, you have the conditions of being a lender. Other private lenders are just like you. Imagine your doctor, lawyer, engineer, or other professional friend. They are busy. They have $50,000 in a CD that’s making them 1.25% a year. It’s not insured (CDs are not insured)! You agree to give them 5% on that money and secure it against first position in a property you are rehabbing worth $80,000.

Not every deal looks just like this, but you get the idea.

Where to Meet Private Lenders

There is such thing as an “accredited investor“. They are people that have income of at least $200k a year and net worth of at least $1 Million. They often have meetings that target these investors. They are people who are sitting on piles of money and need to invest it. If you were to be at one of these meetings you could meet them and ask questions about investments.

Illegal Things to Say

The SEC has rules about what you can and can’t say to investors. For example, you cannot say, “I guarantee you xyz”. You can say “I can secure your investment against xyz”. There is a list of rules for talking to private investors and you do not want to get fined by the SEC for illegal marketing practices (and you will).

How Much Can You Borrow

Most of the laws about limits are for lenders. But navigating exactly what you can borrow, what assets you can tie up as collateral and how to negotiate the deals is something that you will need professional help with.

There are many courses, and some of them are full of knowledge about private lending. The one we recommend is “Private Lending Made Easy”.