Use Private Financing

Use Private Financing

Private Lender Real Estate Financing
versus Conventional Mortgage

With the tight credit markets those investors that succeed most use private money.... Charlie

In today's uncertain economic climate, financing a real estate venture through a private lender is considered a viable alternative to seeking a conventional mortgage through a commercial institution. With commercial lending institutions folding under the pressure of the Wall Street crunch, private lending is becoming the preferred alternative to financing real estate.

Obtaining financing from a private lender is beneficial to real estate investors who seek immediate financing to close a deal. This helps to avoid hassles that occur with financial documentation that is routinely required by conventional lenders. Private lending enables real property investors to potentially close a deal much faster without having to endure the "red tape" of a conventional mortgage lender.

A real estate mortgage through a private lender is a very secure way to borrow due to the fact that this type of loan represents a significant percentage of the appraised property value with a lower loan-to-value ratio than a traditional mortgage lender. Additionally, the lender is able to make a quick decision that would otherwise take longer with a conventional institution, where it must be approved by a group of loan decision makers.

Fast Completion of Financing: Real estate financing via a private lender can potentially be completed within a week of the decision because the type of property being considered for financing is the primary factor in the decision instead of personal information pertaining to the borrower. When compared to a conventional mortgage lender, private lending criterion is more advantageous to the borrower because conventional mortgages require more details like the borrower's history, debt ratio, and overall financial situation.

No Current Financial Information: In some instances, it is necessary for the real estate investor to receive a decision immediately to avoid the loss of a potentially lucrative deal in a competitive marketplace. Using a private lender circumvents the requirement for personal financial information because the lender focuses on the value of the property being used for collateral. Obtaining funding from a conventional lending institution requires the borrower's personal information to be current. If the information is not current, the loan decision is delayed and inevitably, the borrower loses the deal.

No Credit and Debt Ratio: Conventional mortgage lenders focus on borrower credit and debt ratio as well as the type of property being financed. In this instance, the borrower may not be able to obtain credit or the type of property chosen does not represent the interests of the conventional mortgage lender. In this case, the private lender is the solution for the borrower as long as the property has a high value appraisal and produces sufficient cash flow to satisfy the loan.

Larger Loan Amount: Choosing to finance real estate through a private lender sometimes allows the borrower to receive a larger loan than one received through a conventional mortgage lender because the lender focuses on the appraisal. The conventional mortgage lender often poses penalties if the borrower acquires property at a discount to the appraisal. This means that the borrower must invest more of his/her own capital in the venture which would otherwise not be required with a private lending transaction.

Choosing to finance through a private lender is a great alternative to a conventional mortgage and offers more opportunity for creative financing for both the lender and the borrower and provides a win-win situation for both parties.


If you would like the chance to work with me or one of my fellow real estate investor coaches and our advanced training programs, give us a call anytime to see if Dean's Real Estate Success Academy and our customized curriculum is a fit for you. Call us at 1-877-219-1474 ext. 125

Private lenders

I have no problem with private lenders. If you have any, I would be glad to give them a try. Let me know.



Private financing versus conventional mortgage
It was good for me to note: That Investors that succeed most use private money.... I first have got to ask myself where on earth would some one such as myself find this resource (this golden nugget) to tap into. Well,well I
certainly, unquestioanably want to succeed. I am a newbie willing to learn and aspire too, eventually new uncharted hieghts, This little piece of information all of in itself to me is a priceless (gem).
Obtaining financing from a private lender is unquestionably benificial to
RE investors ,I could be wrong ,but possibly a good source to find these
private money sources might be from well seasoned realtor,mortgage broker,
Hard money lenders, Is this some thing that I can apply to my creative
stratigie, having no portfolio to show? Would these private money lenders
still base their decision on the true value of this home? I have alot to learn,Howevere let me say just ,this


Private money can

come from ANYONE who has money or wants to invest their self directed IRAs to earn interest. And, the good thing, you can set the terms and you don't need good credit at all. Smiling Private money is the way to go! Hands down!


do you get it at i could sure use some right now, thanks dale

You need to

market your company and what it does. Tell everyone you know that you are in the RE business and have deals and would like an opportunity to present what your company is about and teach them unique ways to invest their money. , but be very careful. Research SEC laws and find out information. Its never oke to say 'I'm looking for an investor'... big SEC no no!

Information is power, if you use it! Happy investing!

It is CERTAIN you will succeed!

Private Money Illegal 397A,HB610 securing realestate Federal Law

The new FEDERAL LAW allegedly being voted on this month (June 2010) is allegedly modeled on the NH law....

HR 4173 as part of the Wall Street Reform and Consumer Protection Act (similar to the consumer "protection" act in NH)

Unfortunately, friends, the use of private money (loans not from direct family members for your primary residence) to secure residential real property (real estate) in the state of NH is already illegal per 397A as induced by HB610.

I am currently looking at workarounds.... I may have a solution, but am awaiting legal counsel....

Will keep you posted...

Temple, NH


What we do here is invest in property for the purpose of either renting it, reselling it or leasing to own.

The majority of people here are not here for the purpose of acquiring a personal residence. I am certain you are already aware of this.

Quoting laws as you have opens up a can of worms that does not need to be opened. The only private money in the marketplace that applies to what we do is hard money, also known as private equity funds.

Very few people will use private money to purchase a personal residence. It is too costly.

I can tell you that when you see a advertisement from a mortgage company that says they make their own lending decisions, you are looking at a company that uses private money to lend out.

No one is ever going to be able to dictate to anyone, the type of funds they use and where they obtain it at. We as people have freedome of choice, it's in the constitution.

Private Financing


WELL PUT....thanx for your input!


Attract Private Investors to fund your deals so you can do more deals while using Other People's Money (OPM). For more info go to:

John <>< Future DG & DL REI Billionaire


The safe Act is a new federally passed law. There is a webinar on it Thursday to help people understand further its implications. Because I'm without my business computer, I can't even post the link (I am so bummed! Hard drive failure!!!) Its through Alan Cowgill's group. If I can peak at my computer in safemode I'll update with the link.

Jimmy, Private money is actually not hard money. Totally different! Hard money loans usually require several points in closing and charge very high rates. Private money is where you go directly to individuals with money to invest, often times you set your own rates and terms with your private lender. Its the bomb! You can find out more at my site at . This is my free report that's pretty in depth about it.

Best to all,

Good Info

Thanks for sharing the info


"If you cannot do great things, do small things in a great way.”
Napoleon Hill quote


Some one actually knows what hard money really is!!!

The next thing you know you will be telling people what a hard money lender requires to qualify you for their hard money!! (I know you already know) Real world stuff!

Way to go!
Michael Mangham
MD Home Acquisitions LLC


Knowledge is power, but execution trumps knowledge. Tony Robbins Seller site Buyer site Bird Dog Site Tenant/Buyer site

My 2 cents

chrism wrote:

HR 4173 as part of the Wall Street Reform and Consumer Protection Act (similar to the consumer "protection" act in NH)

Unfortunately, friends, the use of private money (loans not from direct family members for your primary residence) to secure residential real property (real estate) in the state of NH is already illegal per 397A as induced by HB610.

Ok think outside the box for a minute and you will get your answer !

The one thing that I am good at is reading contracts understanding them and make a very good decision based on how they are wrote. But in some cases, I will find a small typo ( screw up on the lawyers part ) that once signed, you can ( and I do ) use it to your benefit.
Now I have been reading all day on this bill. I have not seen a business partnership between you and your PML. So far, I am only seeing parts about Mortgage companies ( Banks ) and from what I am seeing is you can only deal with Mortgage companies if its your primary residence.
Now I am not great on reading State Bills and sometimes I will jump over certain parts of the bill to read the part about the part of the part I am referring to.Thats how Bills are wrote its to confuse the hell out of you and lawyers.

Loop holes ( that I think I am seeing. Who knows I might be right )
If you look into the definitions you will see what I am talking about.

VI-e. ""Financial services'' or ""financial services-related'' means securities, commodities, banking, insurance, consumer lending, or real estate, including, but not limited to, acting as or being associated with a bank or savings association, credit union, mortgage lender, mortgage broker, mortgage servicer, real estate salesperson or agent, closing agent, title company, or escrow agent.

This says nothing about PMLs HML hedge funds or offshore accounts.

XXIII. ""Secondary market'' means the market where lenders and investors buy and sell existing mortgages or mortgage-backed securities.

You are an Investor of real property. not paper Unless you plan on having John Doe do a quit claim and you assume his loan. I am not sure what kind of investor you are but this section can hurt you. You would have to get a license.If you planned on having your clients give you a quit claim.

I did searches for Private money lenders , Hard Money Lenders , Hedge funds and so on. I found nothing.

In my personal belief. ( What ever you do Talk with your lawyer before making a decision on which path to take. But these would be key points to discuss. )

This law makes no personal reference to anything we do here in the house that Dean built. Most of us don't use conventional thinking. We do think outside the box. Eye-wink


When Life comes down to push and shove.. Its time for a 1 Ton truck.
- The Belt Group -

looking for private or hard money

i live in the louisville kentcuky area, and im looking for a private money or hard money lender. if anyone is interested please let me know, i am a seasoned investor.

Hey there

Its good to see another from Louisville on here.


Todd S


Here's the link I couldn't get to you earlier about what the SAFE Act is and how it affects private lenders. Alan Cowngill is hosting it. I don't personally use any of his programs, but this is the first webinar I saw about it. Hopefullly it eliminates some confusion:

I got my files backed up and my computer is temporarily working!!! (Hopefully not just temporary!)

The most recent info on the SAFE act

The wording was changed in the safe act as far as owner financing is concerned. An owner of properties can do 3 owner financing deals in a year. The original wording was only going to allow 1 owner financing within 3 years before requiring them to become licensed as a mortgage broker, however, the wording was changed on the 23rd of June to reflect the new phrasing. All other private money lending is not affected by the new laws, according to my understanding.

Hope this helps.

ALso, I have a link to the archived webinar, its on my other computer and I actually never got to watch it myself because of all the computer issues I've had, but I will share it with all of you once I find the link from the old computer.

Using flyers to find pml

Flyers work great to draw buyers and sellers,even bird dogs. I am wondering if they would work to attract private money lenders. Has anyone tried this?


It's not what we get, but who we become and what we contribute that gives true meaning to our lives.


when advertising for PML. Know the SEC guidelines. It is not illegal to advertise, however GENERAL solicitation IS!!! The following items are not allowed ever:

==> Advertising in newspapers, Craigslist, radio, billboards
==> You an NEVER guarantee ANYTHING! (Nothing is guaranteed)
==> You can NEVER say 'SAFE' (IE Your money is Safe with our investment) (This is kind of along the lines of guarantee. Nothing is ever safe. Nothing is ever guaranteed.)
==> You can NOT advertise your returns. (IE Make 10% or more on your money by investing with menow!)
==>You can NOT come out and say 'I'm Looking for Investors!'

If you solicit with fliers, make it about teaching someone about how to become the bank, or how to transfer their sitting 401K funds from old jobs into a self directed IRA to invest wherever they want and the requirements for doing so.

The first and best way is to tell everyone you know personally about your business and the opportunities that are out there. You can solicit the particulars ONLY if you have a personal relationship with them, meaning, you know their financial situation is and have qualified them as able to do private lending (some states only allow 10% of a person's net worth to be used for private financing). Examples are Coworkers, neighbors, your doctor, lawyers, CPAs, other investors or entrepreneurs, etc. Here are some legal and accepted ways to advertise for private lenders.

Here are 3 simple ways to legally and safely advertise
*Luncheons (Keep it GENERAL,like I explained above for advertising)
*Work with a mortgage broker (one that specializes in investment property financing) (they act as a middle person to find the private lenders. They’ll examine the offering and market it to their private lenders for you)
*Online Marketing (if you do that, its fine, you MUST make sure not to DETAIL your offer!) Mention what your COMPANY does, successes; BUT password protect your OFFERINGS and documents. People must have to jump through hoops to get to your offering! (This is why I'd be careful what you put on a flier)

THE RULE OF 45: It you are cold calling (meaning trying to get someone you do not know to do private lending with you), there is a 45 day wait period, in which you MUST have communication with the person on at least 3 occasions (can be email, direct mail, etc) but ONE of them must be in person or by telephone within the 45 days.

Zion Properties

You said something very interesting in one of your replies, which was to check SEC laws carefully.

Awhile back, a gentleman named Alan Cowgill sent me a mailer that talked about private money and from the way it sounded, I almost went for it, however having to spend $800.00, not that I don't have it because I do, but to spend that kind of money for another program, just seemed not worth doing.

He talked about the process and that you needed to create a package that included I believe something called a offering memorandum, checklists to demonstrate that you are not violating the law and your not offering securities or selling securities.

If this is part of the process and I don't know if it is or is not because I deal with transactional funding and hard money, not private money, it seems like alot to go through to get money for a simple single family investment.

Also, you talk about self directed IRA's, isn't the use of them governed by federal laws as to what you can and cannot do with them?

Also, what is the real likelyhood of someone with a IRA, actually allowing you to use their monies for a single family residential investment when they could use those monies for a apartment complex investment where the returns could be better.

Whats your take on all of this?


is that for the entire US or state by state? for Indiana, according to an attorney i listened to on a call, he said nothing about this 3 deals/year. if that is true for all of us, that would make things a little easier. thanks for all the great information you provided in this forum. Smiling


Linda, Army EOD Mom
you can follow my journal at
Fear equals:

The reality is

people with self directed IRAs who are looking for investments with higher returns are ALL over out there. I do not use Alan Cowgill's programs (wasn't too keen on them), but the feasibility of using self directed IRAs is very great. In my county alone, I can pull up OVER 4000 lenders in the past 3 months who have used their self directed IRAs for lending on real estate; both commercial and residential.

The use of IRAs is regulated, but it is PERFECTLY legal to invest in real estate with your self directed IRA. The main law is that you can not buy anything that you yourself, your immediate family, (but you can from your brother or sister or aunt, uncle, cousin, etc) your LLC already owns or anything that you will PERSONALLY use. BUT, you actually can buy even your own RE INVESTMENT properties with them (not ones you currently own), you just need to make sure that all monies flow into and out of the IRA directly. Nothing can go outside the IRA. Most important, your self directed IRA needs to be managed by 3rd party company to qualify for investing in RE with an IRA. You can even get financing on a property you purchase with an IRA, but it must be NON RECOURSE (the property is the only collateral, the financing company or person CAN NOT go after the IRA personally). Equity Trust company and Guildant Financial are two very reputable companies to open a self directed IRA with. (There may be others out there as well)

I am meeting (well, phone convo) with my second private lender tomorrow. Not bad for a begginer, eh?

And, even if you need to pay to learn a system, the $800 is a lot cheaper than 1 point on homes in my area. Its an investment in yourself and your REI business to go to the next level, and will apply to more than one transaction on RE in the future. Smiling The presentation I give is one on one powerpoint presentation.

My last lesson was about syndication and pooling. Boy, once I can get into that, the possibilities are ENDLESS!

Is it some work up front? Yes, it is. Its not as intimidating as it sounds and the SEC compliance is actually not as bad as it sounds. But, if someone is going to give me 100K, 200K, 300K, 400K, 500K, 1M... I think I should have to work for it a little, don't you? Sticking out tongue

Do you know how Donald Trump made his millions (billions)?

Think a little different! Smiling


Yes, it is federal. The 2 senators/representatives decided at the last minute to change the wording. (It must have affected them! LOL) As it is written on the link:

Sen. Christopher Dodd (D., Conn.) and Rep. Barney Frank (D., Mass.), who are the lead House and Senate negotiators working to finish the financial-overhaul legislation, agreed to relax the limitation on seller financing to three properties in one year.

BUT, if IN decided to make rules and regulations tougher than what the federal law calls for,then maybe they decided to do a law with once in 3 year rule only. This law allows the states to make tougher rules than the federal law, or worse. Anyone in Montana is screwed for now.

More changes will be coming as of Oct 1st that may override the state laws. Craziness! LOL

The replay webinar on the safe act

Like I said, it was one of the only ones I could find; its with Alan Cowgill (who I don't know much about other than he offers private money training rather expensively)

Hope this clears some of the confusion. Like I said, I haven't even had the chance to watch it yet either.


Once again I must say WOW!! I remember a post you made several months ago concerning your purchase of a property using your IRA. Do you remember? You have learned sooo much since then!! You are a great example to all of your DG family on taking action and learning the facts, not hearsay!!

Great work, soon your naysayers will be eating crow!!
Michael Mangham
MD Home Acquisitions LLC


Knowledge is power, but execution trumps knowledge. Tony Robbins Seller site Buyer site Bird Dog Site Tenant/Buyer site

Want to put it all in numbers here so you can see it

SO, for purposes of showing an example, I talked to a hard money lender today and wanted to share. He does fix and flip loans exclusively. I had to do these calculations anyways for a property I'm working on, so thought I would share them with you. Since I did the spreadsheet, changing the loan amount was easy.

These are the ACTUAL terms of the HML I spoke to today had (dealsfunded@****):
*NO MONEY DOWN! (sounds great, huh?)
*Interest rate 10-13% (wow, sounds pretty good!)
*65% of ARV (ok, that's doable!)
*Includes purchase price and rehab costs if under the 65% (Amazing!)
*Rehab must be from 5-10% of purchase price. (ok, no problem)
*Processing fee of $475-875 (alright,almost the same as a traditional bank)
*Prequal fee of $675 (o..k..)
*Needs taxes, bank records, FICO scores, anything under 680 can't be done (Sad)
*You must live in your own home (not the one your flipping and fixing).(??? ok)
*All the other normal closing costs (title, lender's title, prepaid, insurance(s), appraisal, prepaid taxes, etc)

*Points upfront 9-11!!!!!
Private lender
*Interest rate 8-15%
*Up to 70% LTV on ARV, regardless of repairs, closing costs, or purchase price
*Includes rehab and purchase price if the price paid is low enough.
*No points
*No payments due until home is rehabbed and sold at 15%.
*Monthly payments of interest only at would be an interest rate of 12%
*Normal closing costs.
So, to put these #s in perspective, and compare the 2 options. We’ll use an ARV of 100K, purchase price of 50K, and repairs of 20K for ease of calculation.
*HML 65% LTV = loan for $65,000 (need 5 k to complete the project)
*PML 70% LTV = loan for $70,000 (won’t need any extra money to complete the project)
*Term: 6 month loan.
Interest rates:
*HML is giving us a 10% rate, 10 points (we’ll take a best case scenario)
*Private lender is giving 15% rate because we want as little money out of pocket up front like the HML (we’ll take a worst case scenario terms for the PML)
*We’ll say normal closing costs are $2000.

Both are debt transactions, NOT equity transactions (meaning, there is no interest in the equity of the asset, or profit sharing)
____________________MONEY OUT OF POCKET_____________________
HML: ************HML Money out of pocket=$15,400************
• Points: $7000
• Rehab: $5000 (loan wasn’t enough to cover it all)
• Normal Closing Costs: $2000
• HML Fees: $1400
• ***Processing Fees: $700 (for a nice round # on the lower end)
• ***Prequal Fees: $700 (rounded up by $25 for ease of demonstration)
PML: ************PML Money out of pocket=$2000************
• Closing Costs: $2000
____________________INTEREST PAID_____________________
HML: ************HML Interest paid=$9229************
• Points: $7000 (points are prepaid interest)
• Interest Paid: $2229 (10% APR for 6 months, amortized 1 yr)
PML: ************PML Interest paid=$4212************
• Interest paid $4212 (15% APR for 6 months, amortized 1 yr)
____________________TOTAL COST OF MONEY_____________________
HML: ************HML Total Cost of Money=$12,629************
• Interest paid $7000+2229= $9229 (points and 10% APR for 6 months, amortized 1 yr)
• Closing Costs: $2000
• HML Fees: $1400
PML: ************PML Total Cost of Money=$6212************
• Interest paid $4212 (15% APR for 6 months, amortized 1 year )
• Closing Costs: $2000
Now, what if you a HML for only 4 points, with the same 10% interest rate? (not an easy task)
If you got a rate like this, the HML would most likely also want a % of the profit, but we’ll say we found an amazing HML.
______________________TOTAL COST OF MONEY__________________________
HML: ************HML Total Cost of Money=$8429************
• *Interest paid $2800+2229= $5029 (4 points and 10% APR for 6 months, amortized 1 year)
• *Closing Costs: $2000
• *HML Fees: $1400
PML: ************PML Total Cost of Money=$6212************
• *Interest paid $4212 (15% APR for 6 months, amortized 1 year)
• *Closing Costs: $2000

BTW, this 2nd HML is not a likely scenario. You would probably need to give at least 10% of your profits on top of the $8429. And if by some miracle you got the 10% with only 2 points with a HML, your total cost of money would be $7029, not bad; But, try finding a HML that will give you a 10% interest rate and 2 points.

BTW, most PML are less than 15% with the same costs as describe here, but for the convenience of getting all the rehab and purchase price in the loan, I made it a higher interest amount. I made this same 15% offer to someone else as a PML off of my IRA. Also, with private money, if say the costs to rehab were only 10K, you could STILL get the loan for 70K.

Is a $500-800 course to learn how to get PML yourself worth it?

I think so, but that's just me.


Tammy you are making to much sense!!! Thanks for putting out the information in a way that our DG family can understand and see!! I know it took some time! That should be a post that that we could refer people to when they have any questions about the difference between HM and PM! HM has it's place. Like when you have no other option and you want the deal and the numbers work. That should help put a stop to the sales pitches made by people that have NO clue and that will end up taking advantage or slowing people down by supplying false info!

Thanks again and good work!
Michael Mangham
MD Home Acquisitions LLC


Knowledge is power, but execution trumps knowledge. Tony Robbins Seller site Buyer site Bird Dog Site Tenant/Buyer site

Investor Financing! Bad Credit, No Problem!

If Your An Investor Who Needs Financing, We Can Help
You No Matter What Your Situation Is.We Only Lend To
1-4 Rehab Projects.

We Lend $25K Up To $500K Maximum

Small Apartments And Condo Conversions On A Case By Case Basis.


1st Position Only
Up To 70% Of After Repair Value
Credit Score Must Be At Least 640 & Above
Non-Owner Occupied


No Pre Foreclosure Properties
No New Or Large Construction Properties
No Raw Land

CALL-1-(405)-464-3670 TO APPLY FOR A LOAN!

Thanks Michael :)

I've been doing a LOT of studying. Setting the foundation. When I do take off, there won't be any stopping me. Sticking out tongue Thanks for the kind encouragement.


There is also a type of hard money that is called private hard money. The difference between the two is as follows. Private hard money is money that brokers lend out on behalf of a private individual or entity, at high interest and points. There are private individuals and entities that have no interest in providing funds for deals like a private money source would. They view that arrangement as sort of being a partner and that's not what they want.

There is of course private money which is going to be cheaper to use on deals.


We as citizens always have a choice, that will never be taken away. I do not believe I ever said we were losing a freedom of choice. if thats what you read it as, I am sorry if I caused you to have that conclusion.

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