Private Money Lenders — Friends and Family Should Be Your Second Choice

June 15, 2017

Here at Palm Desert Capital we pride ourselves on being one of the most popular and easily accessible private lenders in the area, so we want to provide you with a short guide on how you can intelligently raise funds to become a real estate investor.

Recently, in our last post on hard money loans and real estate investing, we talked about how Palm Desert Capital can benefit anyone who’s interested in flipping a house.

Now, this post is even more important. It’s the #1 problem we see new real estate investors make: They focus too much on the minutiae of the deal and not enough on where they’re going to find the money to make that deal.

You might find a great house listed for $250k that you know is worth at least half a million, but you don’t have enough money on hand to make a down payment. Still, you know it’s a sure thing. Someone had to sell in a down market and now another real estate investor will snatch that house up if you don’t act fast.

Where are you going to get that money?

Private lenders.

Of course your first option is to ask your friends and family, but that might not work out well. I’m going to put this in all caps because, really, I might as well be yelling it: BEFORE YOU TAKE MONEY FROM YOUR FRIENDS AND FAMILY, MAKE SURE YOU EXPLAIN THE RISKS AND POTENTIAL DOWNSIDE!

Otherwise, it’s more than money on the line; you’re risking your relationships — with the most important people in your life, no less.

Plus, even if your friends and family are on board with the investment, it’s fairly unlikely they have that kind of liquid capital. If they do, though, this is a viable option.

Your second option is us, Palm Desert Capital. Even though you’ll end up paying more in fees by going with us (I’m not going to lie: that’s how we make money), you’ll actually be riskingĀ less.

Life isn’t all about the numbers.

Now, that doesn’t mean that borrowing money from friends and family is ALWAYS a bad idea. I’m not saying that by any means.

Keep in mind that I run a HML business, so I’m a little biased. Still, I firmly believe that, if you’re smart, it’s better to be independent. Don’t rely on your friends and family; you’re mixing two things that should be kept separate.