Create a free account to save articles, track your reading, and ask questions in the forums.
"Private lenders don't invest in deals — they invest in people. The deal is collateral. The investor is the underwriting."
Private money is the most flexible and lowest-cost capital source available to real estate investors. Interest rates 3–4% below hard money, no points, flexible terms, and the ability to close in days rather than weeks. But accessing it requires one thing banks never asked for: a relationship built on trust.
This guide covers exactly how to find, approach, and pitch private lenders — including the word-for-word conversation script that has helped me raise eight figures over 12 years of investing.
What Private Lenders Actually Want
Before you pitch, understand what a private lender is trying to solve. Most are high-income professionals (doctors, engineers, business owners) or retirees sitting on cash that earns 4–5% in a money market account. They want:
Safety first
Their money secured by real collateral — a deed of trust on a property worth significantly more than the loan amount. They want to know that if everything goes wrong, they can recover their principal.
A better return than alternatives
7–9% secured by real estate beats 4–5% in a CD or money market. That's the proposition — not 'get rich,' just 'do better than what you have.'
A borrower they trust
They're lending to you, not a bank. If something goes sideways, they need to know you'll communicate, problem-solve, and make them whole — not disappear.
Simplicity
They don't want complexity, legal stress, or to manage a property. They want to wire money, collect interest, and get their principal back at maturity.
Where to Find Private Lenders
They're in your existing network — you just haven't told them what you do. Start here:
- Professionals in your network: dentists, doctors, attorneys, CPAs, engineers, business owners
- Real estate investor meetups — experienced investors often have capital to deploy, not just deals
- Self-directed IRA holders — millions of Americans have IRAs they can invest in private loans
- Successful entrepreneurs who sold a business and have liquidity they're not sure what to do with
- Retirees frustrated by low CD and bond yields looking for secured alternatives
⚠️ Important: Securities law compliance
Raising money from multiple private lenders can trigger securities regulations depending on how the offering is structured. If you're raising from more than a small number of investors or using any form of advertising, consult a securities attorney first. Most one-off, direct private loans between two parties don't trigger these rules, but syndication and pooled structures do.
Before You Make the Call
Have these ready before any conversation:
The Conversation Script
This works best in a casual context — a coffee meeting, after a networking event, or a phone call with someone in your existing network.
"Hey [name], I wanted to run something by you. I don't know if this is something you'd be interested in, but I've been investing in real estate for [X years] and I've started working with private lenders who fund my deals."
"Basically, it works like this: instead of going to a bank, I borrow from individuals who want a better return on their money than a CD or money market. They get secured first-position loans on the real estate — so if I ever defaulted, they'd own the property, which is worth significantly more than what they lent."
"On my recent deals I've been paying 8% annually, paid monthly, and I return the principal in 12 months when I refinance or sell. My lenders have always gotten every dollar back plus their interest."
"I'm not asking you to do anything today — just planting a seed. If you've ever looked at your savings or investment accounts and thought 'I wish I could get a better return without a lot of risk,' this might be worth a conversation. Would you want me to send you more details on how it works?"
The goal of the first conversation is not to close — it's to get permission to send more information. Take the pressure completely off.
The Deal Package You'll Send
After the conversation, send a one-page deal summary as a PDF. Include:
- Property overview: address, type, condition, what you're doing (flip, BRRRR, hold)
- Loan terms: amount needed, interest rate, term, monthly payment, repayment plan
- The protection: current value, after-repair value, LTV (your loan ÷ property value), first-lien position confirmation
- Exit strategy: how and when you'll repay them (sale, refinance, cash-out)
- Your track record: deals you've done, how they performed, references if available
Common Pitch Mistakes
✗ Leading with returns, not safety
Private lenders respond to protection first. Lead with LTV, collateral, and first-lien position. The rate is secondary to the sense of security.
✗ Being vague about the deal
"I do real estate" doesn't build confidence. Specifics do — property type, location, deal economics, exit plan. Vagueness reads as lack of preparation.
✗ Asking for a commitment before they understand
The fastest way to get a no is to ask for money before the person is ready. Plant seeds, follow up, educate — let them come to you when they're ready.
✗ Not following up
Most lenders say no the first time — not because they're not interested, but because timing isn't right. Check in quarterly. The relationship that takes 18 months to develop often becomes your best lender.
Marcus Webb
Multifamily Syndicator · 890 posts · REICommunity Contributor
Marcus has raised over $8M from private lenders across 14 individual relationships. He built his entire private lending network starting from zero, and has refined his pitch through hundreds of conversations — including many that didn't work and taught him why.
Join the conversation
77 investors are already discussing this article. Share your experience or ask a question — free members get full access.