In the last blog, I talked about using OPM – other people’s money – when it came to securing your subject to deals.
I went over how to find hard money lenders and what they were, so in this blog, I thought I’d talk about the other type of lender – private money lenders.
Many of my subto deals, I’ll use a private money lender (PML) to get the money that I need to either purchase the property or to do renovations on it.
So what is a PML and more importantly, how do you find a PML?
What is a Private Money Lender?
A private money lender – PML – is usually an individual who willingly loans money to a borrower to make a purchase.
Like a hard money lender – HML – they might pay for the entire purchase of a property, pay the improvement and associated costs of the property, or both.
How much money is put in depends on the PML, as well as whether or not they require a credit check. Again, this is dependent on the PML – they might do a soft pull, they might do a hard one.
A big question people ask is – why would a stranger, for instance, give someone they don’t know money?
We’ll talk more about where to find PMLs, but to answer this question, it’s simple – being a PML is a phenomenal way to make passive income without doing anything.
I know a lot of people, who maybe came into money – like an inheritance – or they make a lot and they want to invest in something.
Becoming a PML means they do exactly that and receive a monthly check, without having to put a ton of effort into the deal, other than loaning out the money.
I actually had one of my Subto students contact me about his friend, who had just come into some money, and wanted to learn how to become a PML.
Check it out below:
Where to Find Private Money Lenders for Subto Properties
Now that you know the basics of a PML, it’s time to go out and find a lender.
One of the best things about PMLs is you can start with family and friends as your lender.
A lot of beginning real estate investors will use family members or friends as their primary point for money lending.
The reason is obvious – they know you right off the bat, so they should already trust you and of course, hopefully, support you in your deals.
If family and friends aren’t able to lend, they may know people who can lend you money, again using their connection with you to pass on to the other lender.
Lastly, there’s the 3rd party lender.
These are people who you don’t know personally, so there may be some requirements you wouldn’t get from your family or friends.
Finding 3rd party lenders is similar to finding hard money lenders – Google is your friend and you can easily narrow down PMLs to your specific location.
Facebook groups are another option, especially for PMLs who are looking for investments to put their money towards.
And lastly, there are Meetup groups, which are location based and in many cases, group specific, so you may be able to find a PML meetup event.
And there you go – now you know about PMLs, what they do, and where you can find them.
As always, don’t waste time or energy trying to do this alone. Join the Subto community, get support and advice, and get those deals going!