Getting Over That First Private Lender Hump

Private lenders… we all want them, right? Of course, right!

Because using and leveraging private lenders in you real estate investing business is, hands down, one of the fastest and most effective ways to give yourself the confidence and the speed of implementation that you need to land those deals that are going to take you where you’re trying to go with your business.

The problem is, time and time again, we hear how hard it is – no matter how many tips, tactics and strategies we give you ­– to effectively find and connect with private lenders. We always hear, over and over again, that getting that first one is a huge hurdle. It seems to be, for many people, this insurmountable first base hit that they can’t seem to get over.

So, for today’s post, we’re going to talk about a couple of specific ways that you can get over this hump. I’ve shared this advice a few times before, but never really focused in on it exclusively. And, I think it deserves focus because it’s really powerful.

These are 2 things you should focus on to get over the hump…

#1 is experience

Rather than seeking funding first, get a record through wholesaling. Get some experience under your belt. Build that track record of deals that you’ve closed and money that you’ve made, which you can then show to a potential lender.

And, even just to get your confidence up, you can wholesale real estate deals without using a penny of your own money, without any of your own credit.

It doesn’t matter what financial situation you’re in… you can start making money. You can start getting experience closing deals by simply wholesaling properties and get that initial track record in place.

Now, do you have to have experience? Do you have to have closed deals in the past to get a private lender? The answer is no. Many of our students have proven that over and over again.

However, could it help to have some experience wholesaling in order to show some of that experience to a potential lender? Sure. I mean, it can both help your lender see you as a credible source to lend, and it could help you have the confidence to go out there and get a lender on board.

#2 is structured opportunity

The second thing that we recommend to get over that first private lender hump is to structure your private lending opportunity a little different than many investors do.

And, there’s really two primary ways to structure your investment:

1. You can structure it where you pay a rate of return. And so, you’re kind of like a bank where you pay a specific rate of return over a time period.

Or…

2. You can structure your private lending opportunities where there’s just a partnership and you share a percentage of the equity or profits in the deal.

And so, to get over that first private lender hump… If you’ve been going out looking to borrow money and offering to pay a certain rate of return and structure it like a bank loan, we suggest that you, instead, structure your private lending opportunity to where you’re just offering a straight 50-50 partnership.

And many times, that can be a little bit easier of first step to getting that first lender on board and making them feel like a partner with you in the deal. And, it can oftentimes give people that added confidence of not looking to go borrow money but rather looking to bring in someone to partner on the profits.

The bottom line

I would say that getting over that first private lender hump, more often than not, has less to do with where or how to find private lenders, and more to do with… your struggle of feeling confident and having confidence to go out there and get ‘er done.

Look, you can achieve those things – gaining confidence and doing deals and getting private funding – with either of these strategies starting with partnerships or starting with a few wholesale deals.

Those will give you the experience that will improve your confidence in yourself, and your belief in yourself, and your ability to do deals. And, it will give you a little bit of a track record in case anybody else or any of your potential private lenders needs a little confidence booster as well.

What say you?

What experiences do you guys have to share about getting over your hump? We’d love to hear