Are you having trouble getting the cash you need for your real estate deals? Have you ever lost a great deal because you didn’t have funds to close it? Is a lack of financing killing your real estate investing dreams?
If you answered “yes,” to any of the questions above, then private money may be THE solution for you.
“Patrick, what do you mean by private money?”
Private money is investment capital from an individual. There is a limitless supply of private money lenders to finance your deals. All you have to do is educate people about your investment program and help them understand why becoming a private lender is a good alternative to traditional investments like stocks, bonds, mutual funds, and CDs.
7 “Must Know” Tips to Getting Private Money for Your Deals
1) It’s All About Personal Relationships
Investors approach me all the time and say something like, “I’ve got this great deal under contract, and I need some private money to get it financed. What would your private investors charge to finance my deal?”
What people don’t seem to understand is that getting private money is all about personal relationships . . . relationships that YOU build with your private money prospects.
2) 3 Types of People Most Likely to Invest with You
The first type is people who know and trust you. This could be a family member, long time friend, neighbor, someone from church or school . . . really anyone that you’ve built a long term relationship with could be a good source for private money.
The second is people who know a good deal when they see one. Anyone who works in a field related to the real estate industry could fit in this category. Examples would be real estate agents, mortgage brokers, bankers, appraisers, home inspectors, attorneys, accountants, etc.
The last type of people most likely to invest with you is the best source of all . . . people that know someone who has invested in a property of yours. Or, in other words, referrals! Once you get your private investor base established, ask them who they know that would also like to make a good solid rate of return backed by real estate.
3) Plant Seeds Voraciously
By “plant seeds,” I mean “get the word out about your investment program.” You can plant a seed by telling someone about it, handing someone a business card with details, directing traffic to a website, or any other strategy to introduce the idea that you finance deals using funds from private investors.
I found that when getting started with private money, it took between four to six months on average to get someone to invest with me after presenting my investment program to them. Sooooooo, get started planting seeds immediately!
4) Less is More
When you are first telling someone about your investment program, less is more! All you want to do is pique their curiously and get them into a formal appointment.
Do this by saying something like, “We buy houses and use cash from investors, just everyday people like you and me, to finance our deals. Our investors are typically tired of the volatility of the stock market and frustrated with meager returns from CDs and mutual funds. Our main service is to provide good returns to investors backed by real estate. Is that something that you would like to learn more about?”
Keep in mind that the goal here is to . . .
5) Get the Formal Appointment
This is where you will present your investment program to the private money prospect. I’ve provided a link in my bio below where you can download a free customizable PowerPoint presentation to use when meeting with prospects.
Make sure that all decision makers are present when you have your appointment. Good meeting places would be an office (if you have one), a coffee shop, or the prospect’s home.
6) Present Your Investment Program . . . Not a Specific Deal
It’s much easier for someone to object to a characteristic of a specific deal than to an ongoing investment program.
If you present a deal, your prospect may not have the required funds, may not like the area or the property.
Once you sell someone on your investment program and you find out exactly what range of funds they have, timeframe available, and how they would like to receive their interest payments, you would only present deals that make sense to them.
7) Following Up is THE Key to Building Your Investor Base
The reason that I’ve been as successful as I have with getting private money is because I followed up with people that I presented to until they invested with me or told me to get lost.
I would add people’s names to my follow up list every time I had a formal appointment. Then, I followed up with them every time I had a deal that met their needs and goals. There are three slides in the PowerPoint presentation that are titled, “Investor Evaluation.” Make sure to write down the information that you elicit from asking the questions on these slides. That’s how you will match up deals that you have on your plate with private investor prospects that you’ve met with.
Patrick Riddle has been a full time real estate investor for over six years, has done well over 100 deals, and has recruited over $6,000,000 in cash from private investors. He shares his knowledge and experience on his creative real estate investing blog. To get your free copy of the “How to Recruit Private Money Millions” eBook and PowerPoint presentation, go to http://www.mustknowinvesting.com/freestuff.html