The Top 5 Private Lender Myths
I have spent the last several weeks sending out a survey to tens of thousands of investors. I have been reading the results and modifying my new product “Cracking the Private Lending Vault.” I was actually surprised at the questions that came in. There were some very insightful questions, but unfortunately there were a tremendous amount of miss-understandings about private lenders.
They were 5 big myths that need to be laid to rest. Unfortunately many of them were promulgated by many Real Estate Professionals or some “Gurus” that were using this as a way to sell their courses and training.
I will go ahead and do this David Letterman Style. 
The TOP 5 Private Lender Myths
# 5 – Private Lenders charge high interest and upfront points
# 4 – Private Lenders have money just sitting around waiting for you to “Borrow It”
# 3 – You can only borrow money short term (for between 6 – 9 Months)
# 2 – All Lenders need to be Accredited Investors (Rich People)
# 1 – Private Lenders are like Unicorns – You hear tales of them, they sound cool, but there are just not any around!
Here is my reply to these myths that surfaced from the survey.
Many people confuse Private Lenders with Hard Money Lenders. I go in detail about the differences in these videos. Private lenders are regular people that have money they don’t want just sitting around. Most have their money sitting in the stock market or a mutual fund earning something for them. Others are more active and are lending it out to real estate investors on their projects. If you happen to come along and have a project when they have money available then perfect. Otherwise you will miss the opportunity of putting that particular lender’s money to work.
When you are working with individuals each will set their own terms for their loans. If you need a long term loan find a lender that is just looking to earn interest for a long time and will not need a more liquid investment. You can set the length of the loan in that regard. As far as only finding Rich People goes you need to read the book Millionaire Next Door. You will be surprised at who really are accredited investors. They are easier to find than you think. BUT, you can borrow money from people that are not accredited. You just need to have a prior relationship with them and understand what their requirements are or should be. There are also guidelines about how much you should borrow based upon thier net worth and income level.
The # 1 Myth is the most often problem. People have this expectation that they can make a phone call or look in a directory and find a listing for private lenders. When they realize that there is not and that they need to make a concerted effort to build that part of the business they are at a loss on how to proceed. This is such a big topic I feel that the best way to help with that is to get on a webinar to get into some detail on how to find the lenders. I am going to do the webinar tomorrow night. You can find out more about it and to register for it by visiting our webinar reservation page.
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