As Real Estate entrepreneurs, we have to take advantage of opportunities that come up. However, I’ve talked to so many investors out there that face the same mental roadblock:
“I don’t have any money to do a deal.”
Don’t worry, I used to share this same belief until I stumbled upon a glaring truth:
THERE ARE PRIVATE LENDERS THAT WANT TO LEND YOU MONEY!
Since I figured this out, we close our deals using almost 100% private capital every month.
Anyways, I ran across an old blog post I wrote a while back and it reminded me about how important your conversations with private lenders are. So I thought I’d repost it in hopes of assisting you on how to approach them and how to properly inquire about the money you want to borrow.
PREVIOUS BLOG POST STARTS NOW:
As real estate investors, we all know that having access to financing for our deals is critical to the profitability of our business. And 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.
I don’t blame you. Who wants to ask someone–a person you don’t really know–for money? I certainly don’t, and really never have. You see, that’s part of the problem, which is the programming that goes through our minds.
That said, I’ve written some tips you need to remember when you’re speaking to your prospective lenders:
3 Tips about Private Lender Discussions
1st Tip: Don’t Ask For Money
If you go around asking people for money, you’re likely to get ZERO.
Nobody likes a salesman, especially a bad, unconvincing one. You must focus on what your lenders want, and that is A SOLUTION TO A PROBLEM–and that’s something we want for ourselves too.
And I can tell you the main problem most people with available investment funds face these days is finding good, trustworthy people to invest with 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. To borrow from businessman Stephen Covey: “Seek first to understand, then be understood.” Once you develop a relationship and learn what your private lenders are looking to accomplish with their investment, you can then 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, the referrals from friends will start coming up after. I’ve 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.
3rd Tip: If it’s not Win-Win, Walk Away
Another benefit of taking this approach is you will occasionally discover that it’s just not a good fit for you and that particular investor for whatever reason. However, it’s much better to figure this out BEFORE doing a deal. Trust me on this. Don’t force it, there will always be another opportunity that will work out better if you have enough patience and persistence to not give up on the future deals you’ll make, as well as the new relationships you’ll make with other lenders.
Thanks for reading, and if you’re interested in seeing how my Private Money System can work for your business, check out the link below: