How do we find private money, not hard money for a multi million dollar commercial deal? Private money is out there but the challenge is finding it. Hard money charges a high % so that’s not an option.[move][move]
I think by marketing. ‘If I was rich … where would I be?’ (boat clubs?, country clubs? golf clubs?) … might be a few places to find them.
Why is HML is not an option? if you buy at a price that coverts HML’s extra costs then it would be an option.
Now, if you want to find private money, you need to have the knowledge and ability to sell people on trusting you with their money. Private money is all around you… you could borrow from your parents, brothers, friends, coworkers…etc. Some of them will have IRA or savings that you can tap into.
Now, do you feel comfortable talking your parents into lending you their life savings and investing it for them? If yes, you found the private money, if no, then get more comfortable with investing first.
Private money isn’t always cheap either, it’s cheaper but not much better. I talked to a guy just yesterday at an REI annual meeting that is a private lender and he was charging 3 points, 12%, and 6 month terms. Yeah its not 14%+ or 4-7 pts but it’s not cheap either. Just look around at your local REI club meetings, they are out there. If that doesn’t work you may have to look farther out and find high net worth individuals but why not look at the REI clubs first and find people that already are familiar with and doing the process?
I view private money as loans with no points and paying a few points above high yield deposit instruments. The target market is people with cash who want to earn more than CD rates without taking on big risk or management headaches. I take that as doctors, lawyers, and retirees. Al Cogwell has material on the subject, but most people start by asking friends and families for loans. If you start marketing to the public, you run into SEC issues.
As BLL suggested above, compliance will be an issue for most that want to expand beyond their immediate sphere of influence—although the affluent are a natural and obvious target, anyone with sizeable retirement savings (that can be converted into a self directed IRA) are good candiates as well.