Real Estate Investors: What is Private Lending?
February 22, 2010scfm 18 Comments »Private lending, as I teach it and as I do it, is a relationship type of lending between my company and another individual. That individual can be one of two people. It can be what I call an outside third-party person. Maybe I do not know that person but through marketing, relationships or referrals, I have developed a relationship with that person. I have sat down with that person, either in one-on-one or in group settings.
Private Lending Investors
I have developed a program by which I explain to them how they can invest in my real estate investing business. I’ve gone through and explained my background and my skills and I’ve shown them deals, both good and bad deals.
I’ve explained to them the investment returns they’re going to get. I’ve explained to them the security they’re going to get on their loans. At that point that individual may or may not want to invest with me, but that is a person that up and to that point I did not have a relationship with.
That relationship may go quickly in some cases. I have had people that I’ve met and within two weeks have been lenders. I’ve had other people that have taken me well over a year. We’ve had a couple of meetings. We’ve kind of lost touch for awhile. A few months go by; they get another piece of mail from me. They call me up, something changes in their life. Maybe they’ve come into an inheritance or something of that nature and suddenly they have some additional cash and they want to invest.
People that get lump sum of money, a bonus at the end of the year, all of the sudden may call me up and say, “Alright, I’ve got some extra money to invest.” That is one type of private lender.
What Private Lending Is Not
The other important element of that is a private lender is what it is not. Private lending is mot a bank or hard money lender. It is very, very rare that private lending is done with banks. Banks are very rigid. They have incredible regulations and rules and things of that nature that they have to work by. That’s not what private lending is.
Private Lending Involves Two People
Private lending is two people, individuals, sitting down and working through a transaction or a lending deal that benefits both parties. I will structure it so it benefits me. I will fit it into my deal. I will put it onto an already existing deal, but in some respects it has to benefit me and the same for the other fellow, the lender. Obviously, it has to benefit me.
It has to provide enough interest to more than offset his additional risk. It has to provide enough security for him to be interested in doing the deal. It also has to fit his timing. If he’s going to need his money back in a year or two or three, it has to fit his timing. It has to be a win-win situation. I know that’s an overused term in the world anymore, but it has to work for both of us. If it doesn’t work for both of us, it’s not a transaction that’s probably going to happen.
Private Lending with a Seller Involved
The other type of private lending transaction is between a seller, somebody selling their real estate to me and putting money back into the deal. Selling private lending is a little bit unique in the sense that they come with the deal. So when the deal happens, they are part of that deal already. They either accept the terms of the transaction or the deal or they don’t.
You do not need to market with them. You don’t really need to establish a relationship with them per se. It’s a good thing to do down the road because they are going to be a lender and you have to pay them back, but at least initially you do not normally have a relationship with them in the beginning. The information we’re talking about tonight really doesn’t relate to sellers in that respect too much.
Again, as I said it’s a one-on-one relationship type of lending between two individuals in such a way that both individuals are meeting their own needs in terms of lending that money. That is, in a crux, a private lending. That’s what it is.
Question about lending
When would the banks start lending to corporates in India again?Although all of the Indian banks are sitting on enough liquid cash, they are still not lending. If they do lend, interest rates are as high as 14-27% !
How much time would it take for it to get comfortable or at least better for the Indian corporates??
Thanks in advance!
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Tags: alan grayson, ben bernanke, federal reserve, Private Lending, ron paul
Posted on February 22nd, 2010 at 6:38 am
They will start in the next 60 days. They don't want to be blamed if the crisis continues and they did nothing..
Posted on February 22nd, 2010 at 6:57 am
BALLS
Posted on February 22nd, 2010 at 7:20 am
there is no more relevant commercial for the 2000’s
Posted on February 22nd, 2010 at 7:47 am
Lending institutions are in the business of making money. At this point, the best return they will get for their dollars is a loan to a business or consumer. Stocks and bonds are too volatile right now. Holding funds in a savings-type account doesn't generate any worthwhile interest. There aren't many other options.
There is much confusion and uncertainty around the tax payer funds. The lending institutions did not get a bunch of money from the government to do with as they please and with no strings attached. The lenders are trying to figure out what they can do with the funds and what strings are attached. Lenders are not really reaping a lot of rewards right now.
Hope this helps. Good luck!
Posted on February 22nd, 2010 at 8:41 am
You need to contact your State attorney generals office and they are the ones who handle this type of scam.~
Has anyone been scammed out of money from Caldwell Lending Group?
I was guaranteed a $15K unsecured loan from Caldwell Lending Group. I was asked to send $2250 to private lender in Canada via wire transfer. …
Posted on February 22nd, 2010 at 4:54 pm
Actually 100k is a small sum and unlikely enough to build an average sized house. The interest would also be VERY high, it would take you many years to pay this off. There is also the problem of collateral, since this is not a construction loan you need to cover it with something other then the property you will supposedly build.
With you borrowing such a small amount of money banks would not be very inspired to risk a year with no payment to discover you are defaulting when the payment is due.
Posted on February 22nd, 2010 at 7:48 pm
Not hard at all. Lenders cannot discriminate based on age. What they will look at is credit, loan-to-value, qualifying ratios, etc. Have them speak with a reputable lender and get pre-approved so they know what they can qualify for prior to making any move.
Posted on February 23rd, 2010 at 2:17 am
The government has to regulate these debtors to within a certain percentage
(example: canada government student loans will do prime + 1% – always.)
it is harder in the us because all the statutes that make america what it is say that government regulation is wrong. this way the rich get richer and the poor get worse.
a free market is a free market and to regulate would change the entire american way of life.
if you've already got your education, claim bankruptcy and screw those guys.
Posted on February 23rd, 2010 at 6:16 am
I am Mrs Amy John,currently living in texas,USA.I am a widow at the moment with three kids and i was stuck in a financial situation by may 2009 and i needed to refinance and pay my bills.I tried seeking loans from various loan firms both private and corporate but never with success,and most banks declined my credit.But as God would have it,i was introduced to a man of God a private loan lender by name Mr Endurance Dawn who gave me a loan of $28,000USD and today am a business owner and my kids are doing well at the moment.So dear,if you must contact any firm with reference to securing a loan with low interest rate of 3% and better repayment plans and schedule,please contactMr Endurance Dawn.He doesn't know that am doing this but am so happy now and i decided to let people know more about him and also i want God to bless him more.You can contact him through his email at endurancelendingfirm@gmail.com
Posted on February 23rd, 2010 at 8:11 am
How true is this for America. When will we wake up and act like adults and take back our lives and our country…
Posted on February 23rd, 2010 at 3:22 pm
This commercial came out several years BEFORE the recession. Soccer moms and Hummer Dads CANNOT claim that were not warned.
Serves the snotty dumbasses right, IMO.
Posted on February 23rd, 2010 at 6:50 pm
This is the funniest shit ever.
Like my car? It’s NEW.
LOLOLOLOLOL!
Posted on February 23rd, 2010 at 8:26 pm
I really don't know what type of insurance Museums carry but if they have "bailees" coverage, it covers property of others while in their care, custody and control. I would ask the museum. I'm sure they would be glad to answer that part of your question.
Reducing cost is another matter. It it a very valuable painting, and I'm assuming it is based on our question, I wouldn't try to cut corners in order to save a few bucks. You can insure it only against certain named perils, but if something outside of those perils happens, the painting wouldn't be covered. For instance, if you didn't cover it for theft and it was stolen, it wouldn't be covered.
If you want to keep it in the family, why not volunteer to help defray the cost of insurance. Chip in and it would allow them to keep the painting so that you could one day have the burden of insuring it. lol
Posted on February 23rd, 2010 at 8:36 pm
reguardless of credt history? so i can have a 320 fico score and still get a loan! oh shizzle! do they finance bling?
Posted on February 24th, 2010 at 1:28 pm
OMG this is the funniest commercial EVER!
Posted on February 25th, 2010 at 1:57 am
The problem is not banks not lending to each other, it is banks not lending to people and companies. Lending allows people to buy houses, cars, etc. When people buy houses, cars, appliances, someone has to build them. Thus, jobs are created. In order to build things, you must have not only labor, but also the infrastructure (machinery) to build the things. Companies need capital to buy the machinery to put the people to work to build things. If the banks don't lend, then the companies can't invest and create jobs, and nothing gets built, so no one can buy anything.
If you think about building one house (then multiply by millions), you can see why people buying new houses (needing credit) is important – in one house, you need the wood to build the house (providing jobs to lumbermen), you need the wallboard, nails, etc. (providing factory jobs), you need the plumbing, heating and electrical, appliances, etc. (more factory jobs), then you need to landscape (agriculture or research jobs for the seed, turf, plants, etc.). Then, these folks who are put to work to supply the stuff to build houses spend their money at local restaurants, grocery stores, car dealerships, appliance stores, etc., creating additional demand (and hopefully paying back old debt). This multiplies through the economy.
So, banks loosening credit is seen as a way to invite investment in the economy, creating jobs, and dragging us out of the recession.
Posted on February 25th, 2010 at 3:45 am
Was this made in 2002? =
Posted on February 25th, 2010 at 3:56 pm
lol this is one of my dad’s favorite commercials