Bad Private Lenders?
They're Not All Bad!

The Ongoing Concern about Bad Private Lenders

A Visitor's Question:

Joe, you said, "Watch out for Bad Private Lenders".

I'm a little scared about the private lenders.

In one of your former e-mails you mentioned how some investors want to stick it to you.

It's not that I don't realize we're going to pay for their risk.
I just don't want it to be too great a price and it's not like we have a lot of options.

I'm just thinking that if we are going to take on that kind of debt, we should be able to find something a little bigger and in a little nicer neighborhood.

How do I get over this fear?

Thanks for taking the time.

These Questions are from: What are Your Toughest Questions and Frustrations as a Rehabber?

Answer from Joe-the-Rehabber

Reply to Bad Private Lenders:

I believe that the majority of people are good - always have.

There are few Bad Private Lenders, it's just that they make the news more often than any good news.

My cautionary remarks about investors wanting to stick it to us is the knowledge and experience that some people are shady dealers. That's what I've experienced, have been taught, and teach.

Example: Every year I take a continuing education class for my real estate license. There are millions of properties sold in a year. In that class we review court cases of about 20 real estate deals where someone tried to rip someone off, or broke the law in some way.

That means that the odds of bad private lenders and dealers are low, but we have to know that they exist.

I didn't mean to over caution about Private Investors! If it's a bad deal, don't buy it. If you’re not sure, run it by me, people you know, a Title Company, and an Attorney to get a legal opinion to protect your interest. There is free legal services as well.

It's even more obvious about the big investors known as the mortgage companies, that wrote all the bad loans, caused the Housing Crisis that the World is in today! Worse than bad private lenders are bad mortgage companies.

Never Sign a Contract Without Completely Understanding It!

I'm most comfortable dealing with a local private investor that I can meet in person, than dealing with a Corporate Mortgage Firm with an inch thick packet of closing documents.

The point is, it takes time and effort to find what we're looking for. During the search, there will be bad private lenders. They're easy to spot because they make us feel uncomfortable. Simply walk away and move on.

The Search Is On

When we can't find what were looking for:

  • If it's not in the MLS
  • Can't find it in the classifieds
  • Can't find it on line
  • Asking around doesn't produce anything

    Then we advertise for what we're looking for.

My suggestion is: Advertise what you're looking for with a compelling story.

I wouldn't stop there!

Just like when we're trying to sell something works for when we're buying :

  • Put fliers on bulletin boards in the areas you want to live
  • Run a classified ad in the newspapers
  • Call and tell everyone you know what you're looking for
  • Yard signs on corners, or in friends and families yards

Bottom line: Advertising and networking.

The more people that here about what we're looking for,

the better chance we have to get exactly what we want,

with the terms and location we want.

What you, me, and many people are facing today is called: Change!

  • It can be discouraging
  • It can be exciting
  • That is a Choice!

    It's all on how we look at it... Positive side or the not-positive side.

If someone was to come forward and invest in a home for you in your local area, there's a better than average chance that you'd get a real fair deal. The bad private investors are becoming a rarity in today’s market.

There are new rules and guidelines to prevent bad private investors from exchanging properties as easily as in the past. The Attorneys and Title Companies, when you hire them, will point that out for you.

Before you commit to any deal, you have an inspection period to check out the property. You have time for an Attorney to review your deal for your best interests. During that time period, if it's a bad deal, you can cancel the contract and get your earnest money deposit back.

I Encourage People to Work Together; eliminate the bad mortgage companies and oust the bad private lenders.

  • Lend each other money on investment properties or for a home
  • Hire each other on services we provide
  • Get together and build relationships
  • Provide excellent services to our communities

    Bad Private Lenders don't fit into this group!

Real Estate Is A Long Term Business!

One bad deal will put a bad private lender out of business for a lifetime.

I hope I Un-Did what I've said that was discouraging about private investors. 

The comment was only to beware of those bad private investors.

The majority are good - that's my belief.

Put this in Perspective.

Terms are always negotiated in real estate deals.

The deal consummates when the buyer and seller come to terms that they both agree upon.

Now, Let's Reverse the Rolls

When we make an offer on a home,

Do we offer the seller what they were asking? Usually Not!

Most everyone would make an offer for much less than what a seller's asking price is. That doesn't make us "Bad Buyers"!
That's just the starting point to begin the negotiation.

In the case of looking for a private investor or a bank loan, the lender will start high.

Again, there can be negotiation to get the interest rate that is acceptable to each party.

Or the borrower will shop around until they meet someone that will provide the terms they can afford.

It would be blissful if we could get exactly what we want, at our terms, with little effort however...

The bigger the deal, the more that is at stake!

Even if a great deal is found quickly, a little extra effort on research will make us much more comfortable with our decisions.

I believe most people are good, and many are helpful.

I've known many wonderful and helpful people in my life.

Fortunately, you're not the only one! I've helped many people at the real estate investors group, thousands of visitors on, and I've helped many of my friends and family over the decades with their real estate and home projects.


It's my favorite subject!
It’s what I have the most experience with.

Plus, what goes around comes around!
I got help when I starting investing in real estate.
Helping others is a good thing for me to do.
Kind of a "Pay-It-Forward" thing - did you see that movie?

You can share your question with all visitors, even if your question is looking for a private investor. click here and share your question

If your a private investor and have satisfied customers and clients, we would love to hear your Success Stories, click here.

The more success stories we get, the more comfortable people will feel to do business with each other and eliminate those bad private investors and bad mortgage sharks.

Where would you like to go from here...

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