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How to Find Real Estate Investor Partners and Private Lenders

Posted by Ken Meyer on Thu, Nov 07, 2013

shutterstock 156304640For all but the most-seasoned real estate investors, finding the right partners and lenders is a task fraught with risk. For this reason, many inexperienced real estate investors turn to family and friends when they come across a potential deal. While this process may work in many instances, it is by no means a guarantee for success. Here are some things to consider when looking at these sources of funds and partners:

Friends and Family

While utilizing a “soft touch” on the people closest to you may seem like the simplest solution to finding investing partners and funds, it can lead to some extremely aggravating circumstances in the future. If loans are made or a deal struck, it should be memorialized in writing so that everyone understands the details and there are no misunderstandings in the future. There are few things worse than telling Uncle Lou that he can't have his money back right now because the deal is “under water.”

Successful Acquaintances

While these potential investors will undoubtedly insist on a written contract, they may not necessarily have your best interests at heart. Always remember, they did not become successful by leaving a lot of extra cash on the table when it came to negotiations. This is not to say that you should not use them for their expertise but be sure that their inclusion in the deal comes on your terms and not theirs.

Private Money Lenders

Just in case it's not clear by now, we'll state the obvious, you should consult experienced professionals before investing in any real estate transaction as the potential ramifications are too important to be left to chance. Private money lenders are your best choice when looking for partners or lenders. In short, private lenders have the right combination of experience, expertise and resources to ensure that everyone is protected in a real estate deal.

The Bottom Line

The real estate industry in general has developed a strong set of procedures and safeguards so that every person in the transaction is contractually protected. Many new investors go wrong when they think that they can avoid or circumvent these protections to save a little money. The process may work but in the long run you will eventually have a problem that could cost you more than you save. So, whether you work with your friends and relatives, seasoned investors or Private Money Lenders, do your due diligence up front to help avoid anything unforeseen down the road.

 

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