Property borrowers often seek financing alternatives outside banks and institutional lenders.  One such alternative is private money lending, a niche designed for non-bankable or non-traditional loan transactions —loans that do not meet the strict criteria of traditional banks, such as those with lower credit scores or unique property types.

Who Are Private Money Lenders?

Private money lenders are typically individuals or private entities that invest directly in loans.  These lenders are not subject to the same regulatory constraints as banks, allowing for more flexible underwriting —such as considering the property’s value rather than the Borrower’s credit score —and faster funding—ideal for borrowers who don’t meet conventional lending criteria and need quick access to capital.

How Do Loan Agents and Lenders Find Private Money Opportunities?

Identifying potential borrowers who may need private money loans requires a combination of research, observation, and networking.  Traditional methods include:

• Reviewing public records from title companies to identify properties with low loan balances.
• Monitoring building permits for additions or renovations, which may indicate a need for financing.
• Tracking delinquent property taxes can signal financial distress.
• Targeting first-time homebuyers, who may not qualify for conventional loans.

In the past, title companies provided databases listing loans with private beneficiaries—an indicator that a Borrower had previously used private money.  However, due to privacy regulations, access to these lists has become limited.

Property and Borrower Profiles Likely to Need Private Money

Certain property types and Borrower situations are more likely to require private money financing:

• Properties on loan default lists
• Properties with delinquent property taxes
• Properties that show visible signs of deferred maintenance
• Properties owned by heirs or beneficiaries of deceased owners
• Properties already encumbered by existing private money loans

While these indicators are useful, building a statistical model to predict private money loan needs remains challenging due to the variability of borrowers’ motivations and circumstances.

My Motto: “You Locate a Buyer; You Do Not Create a Buyer.”

The most effective way to find private money lenders is to cultivate a broad, diverse professional network.  Focus on professionals who regularly interact with potential borrowers or investors:

• Mortgage brokers (both private money specialists and conventional)
• Residential and commercial real estate agents
• Accountants, enrolled agents, and CPA firms
• Estate planning, divorce, and probate attorneys
• Financial planners and wealth advisors
• Real estate and business litigation attorneys
• Contractors, builders, and developers
• Income property owners and speculative investors

Building and Leveraging Your Network

There are many ways to build a list of these professionals.  Consider this: if you have 500 contacts in your network, and each of them has 500 contacts, your potential reach is 250,000 people.

To stay top of mind, consistently provide value to your network.  Avoid generic newsletters or mass marketing.  Instead, send personalized, authentic communications that demonstrate your expertise and help your contacts grow their own businesses.

The Power of Referrals

Referrals and repeat clients are the lifeblood of successful loan agents and business professionals.  Those who master the art of networking and relationship-building often find themselves in the top 20% of producers, earning 80% of the income.  The rest?  They struggle to gain traction.  By recognizing the value of referrals, you can appreciate the role your network plays in your success.

Approaching professionals for referrals is both an art and a strategy.  Here’s a practical, relationship-driven approach tailored to your work in private money lending:

1.  Start with Value, not a pitch

Before asking for anything, offer something of value.  This could be:

• A market insight or trend relevant to their industry
• A helpful article or white paper you’ve written
• An introduction to someone on your network who could help them

Example:

“Hi [Name], I came across a recent update on property tax delinquencies in [County] and thought it might be useful for your clients.  Let me know if you’d like a copy.”

2.  Identify the Right Professionals

Focus on those who are already in touch with your target borrowers:

• Mortgage brokers
• Real estate agents
• CPAs and enrolled agents
• Estate planning and probate attorneys
• Contractors and developers
• Financial advisors

3.  Use a Warm Introduction

If possible, get introduced through mutual contact.  If not, reference a shared connection, event, or interest.

Example:

“I noticed we’re both connected to [Mutual Contact] and work with similar clients.  I’d love to learn more about your business and explore ways we might help each other.”

4.  Be Clear About What You Do

Professionals are more likely to refer clients if they understand your niche and how you can help.

Example:

“I specialize in private money loans for clients who don’t qualify for traditional financing—often due to credit issues, property condition, or timing constraints.  I work quickly and transparently, and I’m always happy to be a resource for your clients.”

5.  Ask for the Referral—Tactfully

Once rapport is established, make a straightforward but low-pressure ask.

Example:

“If you ever come across a client who needs fast, flexible financing and doesn’t fit the bank’s box, I’d appreciate the opportunity to help.  I’m happy to jump on a call or meet in person to discuss how I work.”

6.  Follow Up and Stay Top of Mind

• Send occasional updates or success stories.
• Celebrate their wins (e.g., “Congrats on the recent closing!”).
• Always thank them for any referral, even if it doesn’t convert.

7.  Be a Credible Expert

• Demonstrate knowledge: Share insights on market trends, regulatory changes, or case studies that show your expertise.
• Be transparent: Clearly explain your process, fees, and expectations.  Professionals need to trust that you’ll treat their clients with integrity.
• Show results: Share success stories or testimonials (with permission) that highlight how you’ve helped clients in challenging situations.

8.  Be Reliable and Responsive

• Follow through: Do what you say you’ll do—on time, every time.
• Communicate proactively: Keep your referral partners in the loop.  Let them know when you’ve contacted their referral and how things are progressing.
• Be available: Prompt responses build confidence.  Even a quick “Got your message—will follow up shortly” goes a long way.

9.  Make Them Look Good

• Treat their referrals with respect and professionalism.
• Avoid hard selling.  Focus on solving problems, not pushing products.
• If a referral isn’t a fit, refer them back or to someone else who can help.  This shows integrity.

10.  Educate and Empower

• Offer to host a short lunch-and-learn or webinar for their team on private money lending.
• Provide referral guides or FAQs for them to share with clients.
• Help them understand when a private money loan is appropriate—so they refer the right clients at the right time.

10.  Give Before You Ask

• Refer clients to them when appropriate.
• Promote their services in your newsletter or social media.
• Invite them to network events or industry mixers.

11.  Stay in Touch—Genuinely

• Send personalized updates, not mass emails.
• Celebrate their wins (e.g., “Congrats on your new office!”).
• Check in periodically without an agenda—to say hello or share something useful.

12.  Be Patient and Consistent

Trust takes time.  Some professionals may not refer right away, but if you stay visible and valuable, they’ll think of you when the right opportunity arises.