24 Apr Private Lender Conversation Tips
Wow, sorry for the delay since my last post, but the market has been really good to us lately, so that’s where I’ve been focusing most of my time and attention.
As entrepreneurs, we have to take advantage when the opportunity arises, that’s for sure. I’ve been consistently closing 3-5 deals a month now, and using 100% private money. Many of our clients are doing the same as well.
I’ve been talking to a lot of lenders lately to line up financing for our deals that we have under contract, and build future lending and partnership relationships as a result of those deals.
Anyway, I ran across an old blog post I wrote a while back, and it reminded me about the importance of your conversations with private lenders.
3 Tips about Private Lender Discussions
As real estate investors, we all know that having access to financing for our deals is critical to the profitability of our real estate business. In this economy, developing private lender partnerships can, for some, be the difference between success and failure. Yet, when it comes down to ‘asking’ for the money, this is one of the biggest fears that we face. Of course it is!
Who wants to ask someone for money? I certainly don’t, and I never really had to. You see, the programming that goes through our minds is part of the problem.
So, I’m going to give you some helpful tips you can keep in mind when you’re speaking to your prospective lenders:
1st Tip: Don’t Ask for Money
If you go around asking people for money, you’re unlikely to get some. Nobody likes a salesman, especially a bad one. You must focus on what your lenders want and they want what we all want: a solution to a problem.
I can tell you that the main problem most people with available investment funds face these days is finding good, trustworthy people to invest in and still earn a decent rate of return. So instead of focusing on the money, I encourage my students to focus on listening to their lenders’ goals, fears, and overall objectives before discussing any investment opportunity.
Don’t focus on your deal or perfecting the ‘perfect close’ to hook them in. As Stephen Covey said, “Seek first to understand, then be understood.”
Once you develop the relationship and learn what your private lenders are looking to accomplish with their investment, only then can you begin to structure ‘win-win’ deals and mutually beneficial arrangements.
2nd Tip: Focus on Developing Win-Win Relationships
I’ve found that when you put together ‘Win-Win’ opportunities every chance you get, the referrals from friends will start flooding in soon after.
I have literally had to tell lenders to ‘wait in line’ because I just don’t have a deal for them right now. Believe me, this is a great problem to have, and as we know, a lack of supply will only increase the demand. The surge of customers will only bring in more customers because everyone wants to ride the hype – that’s a fact – but make sure that you get to them soon before they lose interest and start finding and building new partnerships with others. Eyes on the prize!
3rd Tip: If it’s not a Win-Win, Walk Away
Another benefit of taking this approach is that you will have the opportunity to discover when it is just not a good fit for you and that particular investor for whatever reason. It’s much better to discover this BEFORE doing a deal.
Trust me on this, I’ve had my fair share of deals. Don’t force it; there will always be another opportunity that will work out better if you have both patience and persistence. Remember that anything forced will never get good results. It’s not going to be easy at first, I know, but over time, you will learn how to walk away when you see that it’s not a win-win situation. That kind of wisdom and maturity will come with experience.
Thank you for reading and I hope these tips would be of great help to you — I know they did well for me. And if you’re interested in seeing how my Private Money System can work for your business, check this page out: http://simpleprivatemoneysystem.com.
All the best,