If you have ever looked into hard money or as you begin to look into hard money options you may soon realize that between the points and the interest rate the cost of money is expensive.

But when you are in a tough situation or just starting out hard money is great to get your business going.

After you complete a few deals and have some more experience under your belt you will begin to look for cheaper money. Some of the cheapest money you can come across is called private money.

This is where a person usually with a lot of money will look to lend it to you at a great interest rate. You will work as partners usually. You work on finding the deals and flipping the real estate. They will supply you with all the cash you need.

They use their own personal cash and can close as soon as possible. You won’t pay anywhere near 15% and there are no points. There is no bank qualifying and the slowed down process that banks cause that will just kill your deal on the table.

When your working with a private investor you can do the deal / partnerships several ways. You can pay a flat interest rate usually 7% - 11% per house. Or you can split the profit. It is truly up to you and your cash buyer.

These type of people don’t advertise in the paper. Finding them will take some skill.

The first place you will want to look is to family and friends and people in their network. You may be surprised who has money. If that doesn’t turn up anything then you will want to look to lawyers and other professionals who may have wealthy clients.

Get in touch with them and begin to develop a relationship. After a while you can tell them and show them what you do with real estate. Tell them that if they have any clients who would be interested in earning a safe 10% ROI on their money have them contact you.

You can also tell the lawyer that you will pay them for the referral.

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