Where are Private Lenders and How Do I Find Them?

by : Lou Castillo

You can't convince someone who is already earning 20% that they should do this with you because unless you want to pay more than 20% interest, it wouldn't make sense to them. People who have their money in low yield vehicles are the people you need to talk to. The best opportunity is when people have their money in IRAs. IRAs are typically paying 1 to 2 % interest. The other great thing about that is that people that have money in an IRA can't touch that money until they are 60 or 65 years old, so they are a little more willing to lend out that money because it is not something they are not dependent upon for living each and every day. They also don't realize that the government will allow them to make loans from their IRA and decide their own interest rates. The fact is you can create a self directed IRA. Not all banks will do that.

You have to find a 3rd party administrator that will handle a self directed IRA. All they have to do is roll over their current IRA into a self directed IRA and then they can start making the loans themselves. Once you show a potential lender that they can do this and start earning 8-10% interest, they get very excited. This is money that they didn't think they could touch. It's money that they are not looking for until their retirement. Now you are showing them how they can get 5 and 6 times what they are currently earning on their money. That is an incredible benefit to them.

There is advertising you can do to find private money lenders, but the best way to find them is to just start talking. If you just talk to people and start talking about real estate investing in general, they will start to ask you questions like how you find deals and where you get the money to fund them. This gives you the opportunity to talk about private lenders but without having to 'sell' them on the idea. You are just explaining your business and how it works. Always end your conversation with 'I'm always looking for more private lenders. If you know of anyone who would be interested, please give them my contact information.' I guarantee you that 90% of the time those individuals will say well I have some money would you be interested in using mine? Especially if throughout the description of your program you have told them what kind of interest they are going to make, how safe the money is, and also that you accept smaller loans. Most people don't realize that you would be willing to except smaller amounts of money. They assume they would have to loan $100's of thousands.

Lou Castillo has been successfully investing in real estate since the early '90's. Castillo was on his way up the corporate ladder until he recognized that real estate offered a greater opportunity for financial freedom, and for the lifestyle he desired. Lou has a knack for developing powerful & proven systems that work in real estate and has authored more than 7 books and courses on the subject.
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