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I've spent all this time and effort trying to figure out how to get private lenders to fund my real estate deals and now
you write an article on firing them! What are you thinking?!
Well, stay with me here and I'll explain. Most of a real estate investor's focus is about how to attract and keep private
lenders.
But what if a lender doesn't make your life better?
You got into real estate to make your life better, right? Well, shouldn't you work with people that make your life easy?
If you don't have private lenders at this point, being selective about them may be something you've never even
considered. If you do have private lenders, are they easy to work with or are they difficult to deal with?
Once you've done your homework, gotten your real estate education, and taken all the steps needed to attract private
lenders, you could quite possibly have an army of people wanting to loan you money. This is an awesome position to
be in. I've been there and it gives you a great opportunity to work with some pretty fantastic folks.
So what is a scenario where I might not work with a private lender who is trying to throw wads of cash at me?
1) Well, let's say they want to be too involved...
Your lenders are going to want you to succeed and are going to offer some advice from time to time. Sometimes a
well-meaning soul will want to "help" me by offering advice in an area where, frankly, I'm an expert.
I'm not talking about those folks. I'm talking about annoying, aggressive, overbearing, pushy, opinionated folks.
I've spent tens of thousands of dollars on my education and have been in the business for over 10 years. I know how
to do this business. I have definite ideas about the way I want to run my real estate business. I attend seminars all the
time. I'm always striving to learn and to improve.
This is where you need to have a solid education so you don't get sidetracked because you are going to run into these
folks.
Let's be clear on your private lender's job. Their job is to write a check and then set back and wait for a bigger check.
They give me money; I send them interest payments. It is the American Dream for them and you.
2) Another scenario I refuse to work with a private lender is when you find that someone wants to work "with" you and
even be a partner.
They believe that the money they invest in your business gives them the right to offer advice and they expect you to
take it, in the way you run your office, what properties you purchase, what rehab workers you hire, and so forth.
Just be aware that some folks will want to be a partner and if this is not what you want, be prepared to correct the
situation before it goes too far in the relationship.
3) They want to set the rules on how you should pay them. Points, interest, etc...
Hey, that is what banks and hard money lenders do. When I deal with private lenders, I set the rules and that is the
whole idea and my bottom line. It's my way or the highway.
4) Some folks are just plan hard to work with.
Ask the same questions over and over. They don't trust you and treat you like you are going to jip them.
The list goes on and on.
Do you cringe when they come in your office? If so, it's time to let cut them loose.
So how do I fire private lenders?
Well, I can work with most private lenders. In fact, I love my private lenders. I just stay away from people that
make my life tough and just work with the folks that want to work with me and make my life better.
The easiest way to fire private lenders is to never do business with them in the 1st place. If you can pick up on their
personality before any money is loaned and back away from them, it is the easiest and the best.
If they want to partner and/or set the rules. Just say no.
If they have already loaned you money, get them paid back and refuse future loans.
My advice is to always be professional about it. I'm gracious. I simply explain my position and my rational for what
I do without hurting anyone's feelings.
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