As a foreclosure investor, you'll want to find private investors and structure deals with them. So you might ask yourself, How much money do I offer my private investors? That's easy: if its a new relationship, make sure its attractive enough that they are going to say yes! In this article, I explain how to successfully work with private investors.

There is no set amount that private investors expect to make on deals with real estate investors. Some private investors would like to lend you money at 10-12% interest per year. Others may want a percentage of the profits. They all have different expectations. Your job is to understand what they want in exchange for lending you their money.

The terms of private money can be anywhere from one month to whatever deal you need to strike. As long as the investor is getting paid the interest rate that youve promised them theyre probably not going to pressure you to give them back their money before the agreed-upon date--as long as it remains secured.

The more private investors you have at your disposal the less your money is going to cost you. And as you continue to have successful transactions with your private investors, their trust in you will go up and they'll be more likely to lend you additional funds.

With our private investors we let our interest accumulate. For example, we borrow $100,000 at 12% per year, or $1000 per month in interest-only payments. Lets say it takes 6 months to close the transaction; we will not pay them $1000 a month for six months. We will pay them $6,000 at the end of 6 months, plus their principal back. Most real estate investors will only do interest-only loans. They will not reduce the principal as the deal goes on like a bank would.

What you need to do when working with private investors is find someone who understands return-on-investment. If they dont know a lot about the real estate business and return on investment it will be your job to educate them with statistics on the real estate industry that show them that investing in real estate through you is a good risk.

These days many investors are scared of the stock market and are looking for alternatives and most investors are looking for something solid. Explain to your potential investors that real estate is a solid investment that is secured by a Deed of Trust.

Here's my secret for keeping my private investors happy: when I do a good deal with my investor's money, I reward them with bonuses. If I make a substantial amount of money, lets say $35,000, I might reward my investor with a $5,000 bonus check. Why? Because I like 12% money with no points. I want to keep my investors happy. It needs to be a win-win situation for everybody.

Continue to seek out private investors in your foreclosure investing business. It can be hard but very rewarding.