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How To Find And Approach Private Lenders: The Ultimate Guide

Home » Blog » Learn » Where to Get the Money » How To Find And Approach Private Lenders: The Ultimate Guide

I’ve received a lot of questions about how we fund our deals. The simple answer is with private lenders. Obviously, people aren’t happy with that answer alone. It doesn’t really explain anything. We only use one lender per property and work with a handful of different lenders. In this article, I am going to show you where to find private lenders and how to approach and build relationships with them by showing you how we did it.

First, have you joined our private FlippingJunkie facebook group? Come network with us!

What Are Private Lenders

Private lenders are people that lend money to investors so they can buy investment properties. Typically they are doing so to get better returns on their money than the stock market or other forms of investment have provided. The terms and details of each loan are up to the individual lender. In our experience, private lenders typically offer easier access to funds, lower interest rates and fees, and an all-around easier experience than typical financial institutions and hard money lenders.

Difference Between Private and Hard Money Lenders

The difference between private lenders and hard money lenders is basically just the terms each offers. Hard money lenders are named so due to the fact that their terms are usually much harder on us. The loan fees are usually several points (a point is 1% of the loan amount) and I have heard of some charging upwards of 7-8 points! Ouch! The interest rates are usually high as well. Typically, they charge between 15-18% interest rates. Many hard money lenders are in business to be just hard money lenders. Private lenders typically are just doing so for better return on their money as a side investment.

Where Do You Find Potential Private Lenders

When looking for private lenders, there are a couple of groups of people to consider:

Family and Friends With Money

The first is family and friends that have some money they might be willing to invest. Just make sure that you approach people that have enough to lend on a typical house that you would consider buying. You should only have one lender per property. There are also a couple things to consider when approaching this group for lending. You need to carefully consider the fact that the person that lends money for your deal may run into a unexpected problem and need to pull the money out of the deal. This is definitely something that needs to be considered and understood before proceeding. The other issue is that most people consider it a bad idea to work with family or friends. If a deal turns into a dud and you lose money, what are you going to do? Where does it leave your lender? Be careful with this. Even if you use an institutional lender, you should always repay your debts no matter what, but when working with family and friends the consequences could be much worse. We approached several family members and friends when we were getting started. All wanted to help, but most were too conservative to actually commit. This may be different now that we have been flipping houses for almost a decade successfully.

Private Lenders Already Lending To Investors

The other group to approach is the one that is more likely to agree to lend on your investment properties. This is the group of people that already lend money to investors for properties. These guys are perfect because they already know how good these types of investments can be and only need to be convinced that it is ok to lend to ‘you’. You won’t be selling them so much on the deals as you will be selling yourself. I’ll explain how to do this in a later section. There are several ways to find these lenders:

    1. Ask other investors for lenders they use or know of.The difficulty here is that most investors don’t want to share their private lenders because of the limited funds available from each. You never know though, you might get lucky. If you don’t ever ask, you will never find one. Keep a spreadsheet with names and numbers of potential lenders, their contact info, who recommended them, and their terms.


  1. Do some investigating.This is what we did and I feel this is the single best way to find potential lenders for your real estate investment deals.Here’s what you do:
      1. Scour the MLS for recently sold REO’s (bank –owned foreclosures) and other fixer upper properties that were likely bought by investors. If you don’t have access, ask a Realtor to do this for you or let you use their system, with their supervision. You should have a good Realtor on your team anyway. Search for more recent sales. Within the past 6 months should be fine. It is important to find lenders that are actively lending. Your search should include areas that you are interested in investing in because the lender will have already shown an interest in lending in that area.
      1. Find the ones that were sold with a loan. You will probably have to check your county records (most are online now) to see if there was a deed of trust or warranty deed with vendor’s lien filed for the property for the recent sale. The recorded docs should have a name for the lender and the address where the original document was sent after being recorded. Write down this info.You will start to see some of them appear again and again. These are the real prime suspects. You will want to try your best to work with these guys.
      1. You should also keep track of the names and addresses of people that bought investment properties and paid cash. These are a good source of investors to birddog leads or wholesale houses to. Keep track of the area the house was bought in for each investor. You now know they like that area.

Making Contact With A Potential Private Money Lender

Once you’ve created a list of potential private money lenders, you will need to find a way to contact them. Our preferred method is to write a letter to them. The letter usually just states that I am an investor in the area and I am looking for people interested in receiving a good return on their money, secured by real estate. You should also briefly mention how you found them and why you decided to contact them. This is usually something they are curious about anyway. I’ve found that many of them will actually consider it a good sign that you are a true go-getter and have what it takes. The letter goes on to mention that they should call me so that we can discuss it further. As far as SEC guidelines goes, you should be fine as long as you don’t use words like “guarantee” and talk about any specific deal in the letter. You also need to stick with using one lender per deal (no comingling of funds). Just be general about your discussion of providing a better return on their money and to call so that you can discuss it further. When they call, try to make small talk and ask if they have been lending on investment properties for a while. Try to set up a lunch meeting with them so that you can talk more in depth about what you are looking for.

Your First Meeting

This is where I want to mention the importance of your level of confidence. It is of utmost importance that you exude confidence and make it appear that they need you more than you need them. You should try to make it seem like you are interviewing them and that the acceptance to work together is up to you. This might take a little work, but makes all the difference in the world. To help you with this, just consider the fact that you will (if you want to) be offering them 10% interest on their money AND it will be secured with real estate that is worth a lot more than how much they are lending. THIS IS AWESOME AND YOU NEED TO UNDERSTAND THAT IT IS. They should consider themselves lucky that you are offering this to them. Don’t ever doubt that. You should obviously be at a point where you have educated yourself on real estate investing and flipping houses. Do not attempt to meet potential lenders before having done so. You are asking them to lend large sums of money and you’d better know what you are talking about.

Things To Bring

    1. Business Plan – You should have a business plan, even if it just describes what types of properties you buy, that you intend to improve them through rehab, you sell with the help of a Realtor, etc. Just the basic process of buying and then selling and what types of profit margins you look for. What kinds of things will cause you to walk away from a house purchase.Maybe some insight into the real estate market in your area to show that you keep up with it.


    1. If you’ve done some deals be sure to have some before and after rehab pictures and as many details you can provide about timelines and the numbers for the deals. Lenders love this. It shows that as you are prepared and it shows them exactly what will be happening with the money they lend.


    1. If you have not done any deals, try to arrive with some potential deals and your analysis for each. I will talk about what we did before we had done any deals in a later section.


    1. Money to pay for their meal. You’d think this would be obvious…


How Their Money Is Secured

To help them feel safer with the investment, make sure to let them know that their loan will be secured with a first lien deed of trust. Some lenders will want a personal guarantee if you buy your properties using an entity such as an LLC. I’m certainly trustworthy enough to make sure that my debts are paid even if things go sour, so I do not hesitate to give them this. Your title company should be able to have an attorney draw these up for each loan. You will want to buy your properties far below market value. We suggest at least 70% of market value minus cost of repairs. This should be explained to the potential lenders to help them understand that if they did have to take the property back, they would have an asset that is valued quite a bit above what they had into it.

What Terms We Usually Get

This is another time where you need to remember how good of a deal you are offering them. If they ask for a certain interest rate and points, NEGOTIATE WITH THEM. I have a feeling that they actually like to see this. Trust me. They want to know that you are a real businessman or woman. This gets back into you being the one that is controlling the situation. The terms that we typically get are 10% interest with “interest only” monthly payments and a 1 point loan fee. The loan is usually for 9-12 months with 1 point being required for an extension (though this should not be needed). We get loans to cover the purchase, repair costs, and sometimes the payments as well.

What We Did Before Having Done Deals

When we started, we would have had a hard time approaching private lenders to work with. It can be done and should not be considered impossible. Realistically, it is best to work with a money partner or work with hard money lenders. There are national hard money lenders but I feel it would probably be better to work with local ones. One of the benefits to working with hard money lenders or money partners (that are also investors) is that they may keep you from investing in a bad deal. If no one wants to put their money into the deal, it probably isn’t a deal. We started by working with a money partner. He was our mentor and had been investing in real estate for around 20 years. We did all of the work, including finding the deals, negotiating the deals, rehabbing the houses (using contractors), selling the houses and the whole nine yards and he put up the money. We split profits 50/50. This was great when we started because the only thing we risked was our time. No money out of our pockets (except for some marketing expenses). I highly recommend this method of getting started. You really limit your risk.


Now that you know how to find and approach private money lenders you can start saving yourself tons of interest and fees that you may have been paying using hard money lenders. Get out there and start building relationships and kick your investing up a notch. Thanks for visiting the blog.

Danny Johnson

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Comments (83)

  • logan

    I really appreciate this post and all the other ones, your a monster help!

    • Danny Johnson

      Thanks, Logan!

  • logan

    Thankyou! just wanted to let you know I came across your site about a week ago and am playing catch up reading all your posts, they’re great and a life saver. I have been trying to break into RE investing for a while now and with all this info and your help it seems that I cant fail now, so thanks again!
    P.S. I might be reaching out in the future for some advice if your open to help

    • Danny Johnson

      No problem. Enjoy the site.

  • Wade

    Great info again Danny. I just got a mentor earlier this month and we’re doing something similar to what you did when you started, except we haven’t yet talked about him funding any flips. In the case that he isn’t, do you feel it would be smart and ethical to use my mentor/partner’s experience on any potential private money lenders as a crutch for my lack of experience?

    P.S. I’m currently on Chapter 8 of Secrets of Power Negotiating. It almost makes me WANT to go negotiate with a car dealership just for practice. Great recommendation!

    • Danny Johnson

      Thanks, Wade.

      You should probably hash out both of your objectives with regard to the partnership up front so that there are no surprises later. You really don’t want surprises. Say you find an awesome deal by yourself that you want to wholesale. Is he going to want 50% of the profit you make?

      You should definitely ride his coattails.

      That is one of my favorites. It’s funny how it does that. We’ve used several of the tactics in day-to-day negotiations where most people wouldn’t think about negotiating and it’s always amazing to me how well they work.

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  • Brooks

    Great article Danny, thanks. Our last renovation was at 15% — we’re just about to close and have owned it at 15 months (rented for the last 7 months) — talk about some juice!!
    My past business partner actually prefers 50/50 partnerships due to the lack of risk and financial burden – and I don’t blame him – there can be a lot of pressure when the clock is ticking on a loan

    • Danny Johnson


      I feel your pain. We’ve had one on the books for just about a year and it’s a sort of expensive one. This is the one I was complaining about the Realtor problems with in the Twenty Second week post, which is why I am even more frustrated by it.

      I’m with you on the 50/50 partnerships. They are great for less risk, but after a while it gets harder and harder to give up that other half. 🙂

  • Carol

    Hi, Danny!
    Great site! Thanks for sharing everything. How do your lenders deal with the SAFE act? What special statements/clauses do they put in the contracts with you?

    • Danny Johnson

      Thanks, Carol,

      As far as I am aware, the SAFE act does not affect what we are doing. Our lenders are merely lending money for the investment, so there are no statements or clauses necessary to comply. From what I understand the SAFE act affects owner financing when the buyer is going to be an owner occupant.

  • Litia Niumeitolu

    Thank you Danny, yes, it was very helpful.

    • Danny Johnson

      You’re welcome. Thank you for commenting.

  • Clement

    Simply put …Great info! Saw the short video version on goodfaithinvesting…loved the detailed version here.

    • Danny Johnson

      Thanks, Clement. Glad you came to check out the blog.

  • Brooks

    Does your county records site provide you with transactions and if it had a mortgage included? The only way that I know to do this is to look at the MLS ”terms sold” and look for Conventional, Cash, etc. (but of course cash isn’t always cash — there might be a lender involved!) or to pay for the information from a data provider.

    My other thoughts: the way that I’ve done research in the past is to research investors (typically have an LLC, etc.) and look them up and see what deals they’ve done — and if they’re borrowing money, the lender shows up — but this has tended to be the ”professional” lenders.

    Also, if you created some sort of buyer organizer, you could easily track the potential buyers that you find and track where they buy properties, etc. : )

    • Danny Johnson

      I am not aware of our county providing the transactions but you can search for the property’s legal description to find the recorded deed and recorded loan documents. Yes, the MLS is a better place to see if it was cash or conventional. But, like you said, sometimes what is entered is not what was actually used.

      I like the idea of looking up investors with the LLC name search. You could also search using Land Trust. Not as many investors using that now, but I’ve found quite a few in the past by searching for ‘Land Trust’ in the name.

      Great idea for the buyer organizer, although I think two very advanced investors are already working on that. 🙂

  • jeff R

    Great info Danny.
    I really appreciate the great info.I just found your site a week or two ago and cant wait to finish/getting caught up on rerading your blogs/updates.
    Ive been studying/learning/webinaring(if thats a word)for a while now,and your site is a very fresh,new insight into the investing world.So far its awesome.Especially your private money section.It was very clear and down to earth and right to the point.
    I look forward to getting caught up on your site every day.Thanks

    Jeff R

    • Danny Johnson

      Thanks! It might be difficult to get caught up as I am going to be adding more and more stuff. 🙂

  • Bryce

    Awesome post.

    Disclaimer: I don’t want to pry into your finances, so feel free to ignore this question. I understand your reason for not wanting to use your own money to fund deals, but is there a point where you would consider doing so? You’ve been operating successfully in this business for a long time, and given the numbers you write about I would guess you have a decent chunk saved up. Is there a number where any amount over that number you would be okay reinvesting in your business (ie funding flips yourself)? Assuming you have a bunch saved up, it would seem pretty tough to generate 10%+ with less risk than flipping (your own flips).

    I guess a tangent to this question is what vehicles do you invest your savings in? Thanks and again sorry if this question is too personal.

    • Danny Johnson


      That could get pretty personal, but I’ll try to answer it. The amount we have made in the past has really helped us to live a nice life style. It probably isn’t as much as most are probably thinking though. We’ve have lost some money on deals and were not always so picky about which deals we pursued.

      The biggest thing that we’ve striven to do is live debt free (with the exception of the investment loans). Nothing beats that. There are ups and downs in this business as there are in all businesses and it’s nice to be able to weather the storms.

      We invest in properties that we sell with owner-financing. That is part of our “retirement plan”. I intend to write a great post all about that, hopefully in the near future.

  • Meghan

    Great site and very informative, I have to say one of the most thorough sources I’ve seen on flipping. I’m a Realtor in Las Vegas, but I really want to flip and have for a long time. It’s kind of intimidating to just get started even though we have a little cash, it’s not really enough to fund an entire deal, it’s encouraging to know you do this with other people’s money. The mentor is the most appealing to me to have an experienced set of eyes on the deals until I get more comfortable. How did you get connected with your mentor? Was it someone you already knew? Also, do you ever buy properties listed in the MLS or from trustee sales?

    • Danny Johnson

      We found our mentor through my father. Got lucky there. The thing is that he is very picky about who he chooses to work with and we have to show that we were more than willing to do the work necessary to make a successful go of it. I fully understand that position now after trying to help several people. Most people just don’t have the fire or burning desire that is necessary.

      I’m sure there are some investors that offer the same type of deal in Las Vegas. Just have to find them.

      We used to buy a lot of houses from the MLS a couple of years ago. The competition just got to be too much and I got tired of looking at 10 houses and submitting offers, only to find out that there were 10 other offers on the table, for each property. No thanks. Much less competition when you market directly to homeowners.

  • william (Bill ) Hall

    I wanted to let you know that I have been doing research on private lending. I found that you can write a letter to potential investors to let them know what you are doing, BUT you better not make an offer until you have made at least 3 contacts and a period of 30 day have gone by before you make an offer of any kind to anyone. After 30 days you can then give a potential investor an offer. You need to have a Private Placement Memorandum (PPM) for the Fed. and a Small Corporation Offering Registration (SCOR) for the state if you are planning on using a rate of return in your offers.

    There may be a different way to go about this, but this is what has come from my personal research. I spent about 10k (most lawyers wanted to charge me 30k OR higher) to have my SCOR and PPM completed. This also included an Executive Summary that I can hand out, so the investors have an idea of what I am doing, without going into the actual offer before the 3 contacts and the 30 days are up. The SEC is wide awake in this area, so please let your blogers know to be sure what they are doing before they send the first letter.
    My rule is: No Lawyer – No mail or offer.
    – The lawyer I used is no longer available as he is sick.

    I hope this helps,


  • Bill Walston

    Bill, could you cite where you found the info on 30 days? I’m familiar with what is commonly called the “45 day rule” which requires three contacts (one which must be by phone or in person) before presenting your offer. This, of course, applies only to folks that are outside of your existing network. And so far pretty much all of my deals have been done without either a PPM or SCOR. I usually use only one (at most two) private money partners per deal though, so that might explain why it’s not been necessary to go to the added expense. I like to keep things simple. It seems Danny does too, since he advocates “one person per deal” and not “co-mingling funds” as well.

    • Danny Johnson

      Hey, Bill!

      Glad to see you here. I completely agree with keeping it simple.

  • Bill Walston

    GREAT post Danny. You have really broken down finding private lenders to a “step-by-step” that is simple to follow. And you are spot on with your charge to “get out there and start building relationships.” That’s what is key in finding your private money partners – relationships 🙂

    • Danny Johnson

      Thanks, Bill.

      I really enjoy your blog as well.

  • william (Bill ) Hall

    Hi Bill,

    Iam happy to help with what my attorneys have taught me.

    I always use two attorneys just to make sure. Both attorneys have agreed that the time frame is 30 days. I have not been told anything about a 45 day rule.

    If you are going to work inside your network, some states require that friends and family be sent a notice filing…BEFORE you ask them to invest. You must have a PPM if you are asking people outside your friends and family. The number of friends and family in NC is 12, not sure about other states. You can check the SEC website or call, they are very helpful.

    You can have as many people invest on one house as you wish, as long as they are all aware that the 1st investor has a first mortgage and the second has a second mortgage, as so on.

    If you are going to only have one investor on one house, then you still need to have a PPM. If you want to advertise your offer with an interest rate to peak interest, then you must have a SCOR? – 2, 3, or 4 people on one property has nothing to do with co-mingling of funds.

    I like simple as much as anyone, and i dont have money to waste. After 9 months of research, i made the choice to keep my life out of trouble with the SEC. I kept my expenses down by calling the SEC for their help.

    Your first call should be to the SEC. They really do want to help. What they dont like is not following their rules.

    I hope this helps,


  • william (Bill ) Hall

    correction: the number of friends and family you can ask in NC in one year is 24, not 12.

  • Meghan

    Do you think there’s any other downside to using hard money lenders (other than the obvious raping and pillaging on fees) to get started? I’ve got access to a couple where the points are about 3-6% and rates of 9.5-15%. I know this is high, but if I figure those fees into the deal and it still makes sense, I’m thinking it would at least help me cut my teeth…?

    • Danny Johnson

      Just the downside that you mentioned (more expensive). If the numbers still work, sure go ahead. It’s a great way to get some experience which will look better to any future private money lenders.

      Just be careful not to choose someone that insists that they will only lend for 6 months with no extensions. There are some unscrupulous lenders out there that would love to lend on a house, have the investor get the whole house rehabbed and have trouble selling it before the loan term is up so that they can take it and sell it themselves. It does happen. Try to at least get 9-12 months with the option to extend (usually costs about 1 point to extend another 6 months).

  • Erby

    Hey Danny, do you use your private lenders for deals that you wholesale? If so what kind of conditions do you have with your lender since the loan is short like 30days or less?

    • Danny Johnson

      If I can assign the contract, I will. If I close first, I do normally use private lenders for the purchase and don’t change the terms even though the loan is very short term.

  • Fred

    Hi Denny,

    Very informative post. Tons of great info especially for beginner.By doing this for over 10years have you ever lost money on deal?
    And if you did what exacty happened,where mistake being made?



    • Danny Johnson

      Hey, Fred.

      Yes we have lost money on a deal. I planned on doing a detailed post about this in the near future. There were a lot of mistakes made but they all really ended up involving price. That is the single biggest thing that can cause a problem. ARV was not very accurate, rehab took too long, waited too long to adjust asking price and ended up taking over a year to sell. I will go into it more in the post that I will write about it.

  • FRED

    Thank you Danny

  • Phil Gonzalez

    Hey Danny, I just came across your site this evening researching. I am a beginner and have been researching for a while now. What you are doing for us beginners thank you and please keep doing. What would be the avg amount of money needed to start your first deal.

    Thank you,

    • Danny Johnson

      Thanks, Phil.

      Glad you found the site.

      The average amount of money needed to start your first deal really depends on what you intend to do. If you are birddogging or wholesaling, you really don’t need very much. $100 should be fine. Really just need earnest money for wholesaling if you intend to assign your contracts.

      If you intend to rehab or hold rentals you should have access to more money for any unknowns, surprises and vacancies.

  • David

    Hello Danny Great Site!
    I am a true noob to property investing. I have been doing a lot of reading to gain a better understanding of the investing process prior to digging in and this is how I found your site. I was hoping for a little clarification of the private loan repayment process you mentioned…..

    “”The terms that we typically get are 10% interest with “interest only” monthly payments and a 1 point loan fee. The loan is usually for 9-12 months with 1 point being required for an extension (though this should not be needed). We get loans to cover the purchase, repair costs, and sometimes the payments as well.””

    Okay if I am understanding correctly
    Generic example I will use a $100,000 note @ 12 months

    100,000 note
    -1,000 (1 pt loan fee)
    99,000 note @ 10% interest =9,900 total interest
    9,900 / 12 mo “interest only” payments 825 a month??
    or is a 1 point loan fee added to make the deal or am I way off base with all of the figures?

    Thanks in advance for lining me out. I am glad I found your site you have very useful information keep up the good work!
    Now back to reading next up week three…

    • Danny Johnson

      Hey, David. Glad you found the site.

      You were very close.

      100,000 note
      1,000 loan fee is paid at closing
      100,000 note @ 10% interest = 10,000 interest if held over the entire 12 months
      Payments are $833.33 (10,000 / 12)


  • Tracy

    Just wondering how it works with placing the offer on the home. Can you still offer “Cash” on the house and then assign a lender at closing?

    • Danny Johnson


      Yes, I still present it as cash to the seller. It’s basically the same because you are not jumping through hoops for a lender.

      If you are making an offer for a bank-owned house, you will want to specify that you are getting a loan. If you are confident, make sure they know that the offer is NOT contingent on the financing.

  • @buyhousescheap

    Hey Danny,What type of terms do offer your PL weather its a rehab deal or a 30 day wholesale flip? When doing wholesale deals unless I can assign it quickly I usually have to wait and do a double close. Not to mention how when it’s a possible big pay day and your hoping you can hurry up and get it closed before another investor goes to the seller with a supposedly better offer and you possibly lose the deal.

  • @buyhousescheap

    Disregard the last statement Danny. Went back and read the post over and saw where you mentioned your terms when dealing with PLs. Thanks.

  • Steve

    Danny, I just started reading your site. Now when you use the investors, the money you are asking them to put, does it include the cost of repairs?

    • Danny Johnson

      Yes. My loans include purchase and repairs. I buy the houses cheap enough so that, even with repairs, the loan-to-value is still great. My loans are usually around 65% of resell value.

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  • Steve


    This may sound like a dumb question. However when you go look at a property, do you already have funding lined up or worry about that after you have made an offer? I only ask, because I have a home I would like to go see, but have not secured funding yet. I have a friend who has used a Hard Money lender before that is an option for me.

    • Danny Johnson

      Not a dumb question at all.

      We’ve always got lenders ready and willing to lend so we don’t have to worry about it.

      You should try to contact as many hard money lenders as you can find (both looking yourself and asking as many other investors as you can) before hand. This way you can find out what terms each of them offers. You need to know who is going to be the most inexpensive. Also, if you going the rehab route, I would not accept any loan less than 9-12 months in length. You don’t want to have your new hard money lender taking your newly rehabbed house from you because it didn’t sell right away.

  • Larry

    Wow: What good info. Thank you very much.

    • Danny Johnson


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  • Armando

    100,000 note
    1,000 loan fee is paid at closing
    100,000 note @ 10% interest = 10,000 interest if held over the entire 12 months
    Payments are $833.33 (10,000 / 12)

    So the amount of interest paid is determined by how long you have the loan for?
    So if the loan was only held 6 months, you would only payout 5,000 interest?
    If so how can you calculate monthly interest payments, the length of term is a set figure, i.e 12mo, but the actual time you have the loan can vary.

    • Danny Johnson

      You are correct about paying $5,000 in interest if held for only 6 months, for an interest-only loan.

      I’m assuming you are asking about how to determine how much your holding costs are going to be if you don’t know how long you will end up holding it? If that is correct, you can’t. But you can estimate by looking at the average days on market for the comps and how long you estimate the rehab to take.

  • Jennifer Eoff

    I loved the site. Just a few questions. I have had a carhauling business for many years. I decided to sell the truck and rest for a year. We did and now we are having trouble finding a loan for the $75,000 we need to get the next truck. I have never been late on truck payments, but have a poor personal credit history from medical. I only have $7000.00 down. But if I find a private lender then they would earn over $20,000.00 in 2 years. Even if I just had a co-signor I could get the loan. The company that we had the last two trucks through had problems with others last year and that messed it up for people that paid like us. We are used to paying $4,000.00 a month for a truck payment. So $3,000.00 will be nothing. Where should I go to find help???? Oh and they gave us letters of recommendation for our history.

    • Danny Johnson

      I’m sorry, but I’m not really the best person to give advice on finding loans for vehicles…just houses. We know about working with private lenders to fund our flipping houses business, but I’m afraid I don’t know much about lending for trucks. Sorry.

  • Tom

    Could you explain the ins and outs of non-refundable earnest money in an assignment

    • Danny Johnson

      Sure, Tom.

      Non-refundable earnest money is the deposit you request from your end-buyer that you are assigning your contract to. I typically want at least $2,000 non-refundable earnest money deposit when I assign contracts. There are two ways to handle it. You can either have them make the check out to you (as it is non-refundable anyway) or they can make it out to the title company that is closing the deal. I prefer to just have it made out to the title company because, if it the deal doesn’t close for any reason that is not the fault of your end-buyer, they will have to get their earnest money deposit back from you. If the deal doesn’t close because of your end-buyer, you keep the earnest money deposit (the title company cuts you a check for it if it was made out to them).

      • Tom

        Danny, Thanks for a great explanation.

        • Danny Johnson

          No problem, Tom.

  • Tom

    Just to be complete, I assume that if the deal closes, the wholesaler/assignor keeps the non-refundale earnest money in addition to his assignment fee. Am I correct in this assumption? Thanks in advance.

    • Danny Johnson


      But, the assignment fee usually includes whatever non-refundable earnest money you are getting. The earnest money comes out of that. So you assign a deal for $10,000 and you get $2,000 of that as non-refundable earnest money. You still only get the total of $10,000.

  • jenny

    Hi Danny,

    I want to build and flip a house since I have knowledge and trades in the construction industry. I do not have the income to back it up so I asked my brother to back me up as my financial partner. He agreed to do it and we are trying to figure out the right way to start the process so there are not any misunderstandings. He can either get a construction loan for the process and put down the initial 20% and pay the interest only payments each draw or pay out of his own pocket. If he did the construction loan what is a standard rate of return for private lenders for their initial down payment investment if the construction loan is at 4.6 APR? Do you pay a rate of return to him for the down payment or just split the profits evenly in the end since we are already paying 4.6 APR to the bank? Would that rate of return be the same for him if he were just loaning it out of his own pocket without any bank financing? Thanks for your help.

    • Danny Johnson


      These are great questions but there aren’t any standards that I am aware of for the answers. It is more about what you both agree on. If he is just putting up the money, I would think just splitting the profits at the end would be fair. In my experience, private lenders are happy with about 10% interest if you really want to pay interest on the what he is paying for the down payment. But, if he is going to profit from the flip, that might be payment enough for using the money.

  • @buyhousescheap

    Hey Danny, did you ever go back and discuss how to go about acquiring private money even when you have not done a deal? have been working on getting private lenders for potential deals but whenever the question comes up about how many deals have you done and the answer is none they tend to not be interested at that point.

    • Danny Johnson

      I know there is not much time when you have a great deal under contract, but if you have one under contract or even just example numbers for a deal, that could peak their interest. Don’t give up. If you are persistent and can convince them that you won’t bring them anything but an awesome deal, your chances will be better.

      Beyond that, just doing a deal or two with hard money is usually the easiest option. There are some out there that aren’t too ridiculous, you just have to find them.

  • Ken Williams

    I you haven’t got to the point in your real estate business where you need private money yet, you probably have really deep pockets or are paying too much for the money you’re currently using. Do yourself and your family a favor and read this now while it’s still important to you.

  • Kevin DeMatteo

    Just stumbled upon all your stuff everything sonnds great you really make everything sound reasonable and Doable can’t wait to keep going I will get my first house soon thank you very much

    • Kevin DeMatteo

      Can’t stop reading I think it’s great I will make it

      • Danny Johnson


  • Maria

    I’ve been listening to the Flipping Junkie podcast since it started and finally took the leap into investing. My concern now is funding so this post is truly helpful. I have a killer deal (I think), but I’m nervous about approaching potential investors. My deal is a fix and hold two unit house built in the 1930’s. It should start cash flowing as soon as we get tenants in. Any suggestions for what type of PMLs to approach for this kind of deal? It’s more long term than a fix and flip. Also, can you recommend a mentor?

    • Danny Johnson

      Hello, Maria.

      Congrats on finding a deal. You can find some that are doing loans on the lower end houses. Those typically are done for longer terms.

  • Matt Hipp

    Sorry, I’m late to this thread but just had a few questions. My partner and I have done a few deals with some HML’s and now are ready to approach PML’s:

    1) do you generally make monthly payments to your lenders or do you pay all of the interest, principle and points at the closing to the end buyer?

    2) Do your lenders generally require you to keep the repair funds in an escrow account and draw the funds out as you progress through the project?

    Thank you for your help and we will be signing up for a LeadPropeller site shortly!

    • Danny Johnson

      Hello, Matt!

      1. We’ve done both. Typically, we’re making monthly payments. Some of our private lenders have agreed to just getting paid all interest when we pay off the loan.

      2. Our lenders allow us to get all funds at once, without escrow. Makes it much easier.

      Glad to see you’ll be signing up for LeadPropeller! Smart move. 🙂

      • Candice Eisenhower

        I like the fact that hard money lenders will spare you from having a big fall over a bad investment by giving you a financial support in the project that lasts for a limited period of time. This should help me cut the huge amount of risk that I’m dealing with especially if I’m new in that kind of dealing. If I were an entrepreneur, I will not hesitate in looking for a hard money lender to support me in my new business efforts.

  • Darryl Cummings

    Man, you are an amazing “mentor”. I don’t know how many people tell you how great your info is but you cannot put a price tag on it.

    I am so close to getting my feet wet but I’m still in the absorb knowledge phase. I am currently listening to your podcast during the day while at work and I just can’t wait to get home and make notes.

    I really appreciate your knowledge and willing to share info and worksheets as well as all the links.

    You are an amazing human and I wish you the best.

    • Danny Johnson

      Thanks, Darryl.

      I really appreciate that. Keep in touch.

  • Debra Williams

    What about using my own money?

    • Danny Johnson

      Of course you can!!

  • Andrew J

    Great article, Danny!

    As a private lender myself, I agree with all of the points you made. I’m happy to work with individual investors flipping properties. Mostly because, I’ve been there. That’s how I started out.

    If you’re in the Portland, Oregon area, feel free to email me at [email protected]

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