private money

it's not that easy asking for money and someone will handle it to you. The private investor will ask you to have the property as collateral and funds would be wired directly to the closing company. The Private lender will want his/her money secured. Once you find the property, get a commitment from the private lender that he/she will fund the property. You should have already discussed what kind of return they will get; in other words, they want to know how much they will make from the deal.

I agree that most of the time it will not be as easy as getting money from a private investor. However, that will depend upon the contact we are talking about. If it is your mom she may be more willing to release money to you without collateral. Then again it is your mom and she may have more requirements than anyone else.

If you have accounts or an account you will want to move money in and out for tax purposes. For example: if a deal closes and you are going to pay - say your mom - her $20,000 back make sure that you write a check to do so. You can then have your mom cash it and give it back to you. Reason: this shows, in the case of an audit, that you paid the money back as a loan rather than a profit.

If you work with several lenders they should have separate accounts where you hold their money. This can be a club account or separate bank accounts. You will want to make sure that you are not grouping funds together because this could be accounted as a move as a stock. *See - S.E.C vs HOWEY*.