In the world of real estate investing, having access to capital is the key to scaling your business. Whether you’re funding fix-and-flips, short-term rental acquisitions, or buy and hold deals, private money lenders (PMLs) and hard money lenders (HMLs) can be game-changers. But knowing when and how to borrow from them is just as important as having access to their funds. Let’s break down the best strategies to attract and work with these lenders successfully.
Increase Your Exposure to Attract Lenders
Money follows attention. The more visible you are, the easier it becomes to find funding for your deals. Here’s how you can leverage social media and networking to attract PMLs, and HMLs:
- Tag key people in your posts – Engage with PMLs, HMLs, and regional real estate leaders to boost visibility.
- Identify and connect with industry connectors – Network with those who have large investor circles and can introduce you to potential lenders.
- Share your journey – Post about your wins, challenges, and lessons learned. Transparency builds trust.
- Engage in local and national investor groups – Many investors are actively looking to deploy capital into strong deals. Find them, connect, and present your opportunities.
Understanding Different Types of Lenders
Each type of lender has different risk tolerances and lending terms. Knowing how they operate will help you choose the right funding for your deals:
- Private Money Lenders (PMLs) – Individuals lending their own capital, often at competitive interest rates, with more flexible terms than traditional banks.
- Hard Money Lenders (HMLs) – Institutional or private firms that provide asset-based loans, typically at higher interest rates (10-15%) but with faster approvals.
- Borrowing from Family and Friends – Many investors, especially Canadians looking to break into the U.S. market, can tap into their personal networks for funding. Borrowing from family and friends can provide flexible financing with fewer rigid terms than traditional lenders. Educating them on creative financing strategies and structuring deals in a way that benefits both parties can turn personal connections into powerful funding sources.
Structuring Deals to Keep Lenders Coming Back
Lenders want one thing—security in their investment. If you structure your deals properly, they’ll be eager to fund you again and again. Here are a few key strategies:
- Prioritize returning their capital quickly – For example, offer PMLs 100% of the cash flow until they are repaid. Only after that can you shift to a 50/50 or 25/75 split (them/you).
- Offer competitive interest rates – For non-investor PMLs, provide 8-10%. For fellow investors, offer 12%+. Hard money lenders typically expect 10-15% plus points upfront.
- Demonstrate reliability – Always communicate openly and ensure timely payments. Investors love working with operators who handle capital responsibly.
How to Pay Yourself While Scaling
A common question among new investors is, “When do I pay myself?” The answer depends on how you structure your deals. One approach to consider:
- At acquisition – Take an acquisition fee to cover upfront costs and ensure you get paid at the start of the deal.
- After renovation (if you act as the GC) – If you manage the rehab process, compensate yourself for overseeing the project.
- From cash flow – Take a percentage of rental income after PMLs and HMLs are fully repaid.
- After every refinance – If you’re using the BRRRR strategy, pull out funds upon refinancing.
By following this model, you ensure you’re financially rewarded while also keeping your lenders happy—so they’re always ready to fund your next deal.
Final Thoughts: Get Loud, Get Funded
The biggest mistake new investors make is staying quiet—I’ve been guilty of this myself. If people don’t know you exist, they won’t know you need funding. Start sharing your story, networking with the right people, and structuring deals that keep lenders happy.
There’s no shortage of money—only a shortage of well-presented opportunities.
Want to learn more about leveraging creative financing? Follow me at Her Empire Keys and stay tuned for more real estate insights!
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