If you are a real estate investor and need funds to finance your deals there is really only one option. A Private lending program where private individuals who have extra money to invest in your real estate investing business. But with the current popularity of private lending we are seeing our coaching students and subscribers making a number of mistakes and thought we would highlight the top 4 mistakes.
If you are a real estate investor and need funds to finance your real estate deals or are looking for money to cash out of deals there is really only one option. That option is a private lending program where you allow private individuals who have extra money to invest in your real estate investing business.
But with the current popularity of private lending we are seeing our coaching students and subscribers making a number of mistakes and thought we would highlight the top 4 mistakes and what to avoid when borrowing money from private lenders.
Mistake #1 - Advertising on the Internet - We have seen many investor get into big trouble with the federal SEC or state SEC regulators by advertising for private lenders through internet sites like Craig List and other bulletin boards. The problems are first regulations are patrolling these boards looking for violations. Second you can not be sure that people outside your state may be looking at the ads or people who are not qualified. We do not recommend any internet advertising for private lenders.
Mistake #2 - Using the wrong words in Advertising - We also strongly advise that in all your written or verbal advertising that you NEVER, NEVER, NEVER us the following terms: Guarantee or Guaranteed, Low Risk, Secured, Safe or Risk-free. All of these terms will attract the attention of the federal or state SEC organizations as potentially false or misleading advertising of securities for sale.
Mistake #3 - Not Using Proper Disclosure Language - I strongly recommend you use a disclosure statement in any advertising material, letters, documents, or other marketing materials as part of your private lender program such as;
"This is not a public offering. This is not an offer or invitation to sell or a solicitation of any offer to purchase any securities in the United States or any other jurisdiction. Any securities may only be offered or sold, directly or indirectly, in the state or states in which they have been registered or may be offered under an appropriate exemption."
Mistake #4 - Advertising Across State Lines - Most small RE investors do not want to go to the cost and trouble to file with the federal SEC. So it is very important you only advertise and deal with potential investors from within your state and do use advertising that may cross state lines.
As with all business it is very important that you avoid as many mistakes as possible and investing is no different. But with private lending a mistake can have serious and expressive consequences so be careful and avoid these mistakes.
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