3 Sources of Private Money

Posted on: September 27, 2011

Categories: Other Articles

Author: lbuen

As you may already know, cash is the lubricant of any real estate business, or any business for that matter. With ready cash, you can command a better bargain when acquiring a property as compared to buying it under financing. By eliminating the red tape involved in obtaining funding from traditional loan, ready cash allows you to focus on your actual money-making endeavors – looking for great deals and managing renovations. With ready cash, you can instantly seize opportunities that come your way without the need to forage for funding. Hence, it allows you to make money faster. But where do you get ready cash? Private money is a faster, more convenient and flexible way of securing cash for your deals. Let us take a look at some of the financial headwaters for this informal type of funding.

1. Get Private Money Directly from Friends, Relatives, Colleagues and the People You Know 

300px Assorted United States coins 3 Sources of Private Money

Private Money Image via Wikipedia

If you are a newbie real estate investor with limited funds and small network, you can start by tapping the people you know. Your mother, uncle, friend or co-worker may have spare cash that is just sleeping in the bank. Ask them if they are interested to ha

ve their money earn more than the interest they earn from the bank. Tell them about the real estate investing opportunity that you have and take them as a financial partner or simply as an investor. You can arrange the terms of how much ROI they should expect, whether this is fixed or variable, and when they would be getting back their money together with their earnings. If you know one person who has a hefty amount substantial enough to finance one entire deal, then you are in great luck. However, if the funding you get from your mother can just cover about a third of the deal, continue looking for additional private money sources.

2. Source Private Money From the Friends of Your Friends, Family and Colleagues

Do not just pack it in if they say no when you ask the people that you know if they have extra money and are interested to earn more than what they are earning in the bank. You can ask them another important question that may lead you to ready cash: “do you know anyone who has this much money (specify the amount that you need) to invest and would like to earn (specify the rate that you will be giving the lender which, of course, should be more than the interest rate in the bank). To motivate them to introduce you to the moneyed people that they know, offer them an incentive for every successful referral they give. Charge this amount as part of your marketing expenses.

3. Tap Private Money From Total Strangers

As a real estate investor, networking with other people is a very important endeavor. This is where you meet potential buyers, sellers, investors and other people who may be able to refer you to other prospects. So join real estate groups and other clubs and attend gatherings and talk about your real estate investing business. You may not get private money after attending one meeting. Be visible and helpful, and once you gain their trust, then they may invest.

Another way of building your network is through social media. Develop a good real estate website and use it to build your credibility as a real estate investor. Be visible in real estate and other related forums, blogs, Twitter, Facebook, LinkedIn and other social networking sites. With accumulated effort, you may be able to win the trust and private money of people who were once total strangers.

Using private money to finance your real estate investing deals can be convenient, flexible and fast especially if you know how and where to get it.

 3 Sources of Private Money
pixel 3 Sources of Private Money

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