Everyone, including me, will tell you that Private Money is the way to buy real estate. No bank qualifying; flexible terms and fast actions. But one more part that some will not tell you is how flighty that money can be. We ran into with our current purchase. 
photo credit: sanderovski & linda
We are preparing to close the property in Riverbank when our private money walks away. Why? Just read the paper. The economy is creating opportunities for us but also scaring others away. A first time private lender needs time to get comfortable with the idea. Do not use a first timer on a purchase that requires a short time frame to close. That is a recipe for disaster. Here are some steps that can ease the situation should it arise.
- Never turn anyone away: The opportunity is gone only when the property is closed. First with the money wins. Everyone else in two place can be on the next deal. What a problem to have.
- Constantly advertise it to your warm list. There will be a time when you have multiple properties for private money. You keep that list in front of your prospects. Send out a weekly newsletter so people see what you are doing.
- Get the money from the private lender into escrow as soon as you can. Even if you have to offer interest for the money prior to closing. This will help you sleep at night.
- Be prepared with a back-up plan. We offer to pay expenses of the lender if they transfer the money from a CD or other account. You want to make it as easy as you can.
- You should be working your warm list all the time. Keeping them informed of what you are doing. This inspires confidence, always a good thing with any lender, and makes the emergency call easier. But if you are always talking to your warm list they know what you are doing and the money will always be there for you.
We solved our problem by sending out an email with a flier of the opportunity. The next day I had two people calling me asking about the deal. We are still on track to close, but I did not sleep very much last night. Communication is the key and keeping your warm list informed of what you are doing will help a great deal.
