← Back to BlogMay 202610 minDan White
Private Money Lenders for Real Estate: How to Find and Use Them
Private money is cheaper than hard money and more flexible than conventional loans. Building a private money network is one of the highest-value activities in real estate investing — but it takes relationship-building that most investors underinvest in.
Market Context
Live Market Data
Washington, DC Housing Market
Cool Market
Data through Mar 2026
Median Sale Price
$590,000
+0.8% YoY
Median Days on Market
44 days
lower = faster market
Sale-to-List Ratio
99.7%
buyers' market
Homes Sold
4,457
last reported month
Source: Redfin Data Center. Updated monthly. Data reflects Washington, DC residential sales.
redfin.comWhat Is Private Money
Private money comes from individuals — not institutions — who lend their capital to real estate investors in exchange for interest income secured by the property. Typical sources: high-net-worth individuals, retired professionals, business owners, self-directed IRA holders. Terms are negotiated directly between borrower and lender.
Typical Private Money Terms
- Interest rate: 6–10% — significantly cheaper than hard money
- Points: Often 0–1 (vs. 2–3 for hard money)
- LTV: 65–75% — varies by relationship and deal
- Term: 6–24 months
- Structure: Fully negotiable — interest-only, monthly payments, or deferred
Where to Find Private Lenders
- REIA meetings: Investors with capital who are moving toward passive returns
- Self-directed IRA custodians: IRA holders looking for non-stock investment options
- Professional networks: Doctors, attorneys, accountants looking for passive real estate exposure
- Your existing network: Family, friends, former colleagues — more common than people think
Model Your Deal With Private Money Terms
Freddie calculates holding costs and ROI at any interest rate — see how private money vs hard money affects your profit. Free.
Model My Financing Free →Legal Requirements
Borrowing from a small number of known individuals for specific deals generally doesn't trigger securities law. Raising money from a broader pool of investors through marketing requires compliance with SEC regulations. Consult a securities attorney before raising capital from people you don't have a pre-existing relationship with.
Dan White is a licensed Virginia real estate agent at Pearson Smith Realty and founder of FreeDealCalc.com. He has been investing in real estate for 20+ years.