BiggerPockets

4 Simple Steps to Getting Private Money

Saturday, September 18

I want to give some quick tips for those of you who are just starting out and looking to secure private money for your deals.  Securing private money has become a critical part of our business, particularly since I left my 9-to-5 back in May.  It’s awesome to be able to provide solid returns to others and also get flexible terms for yourself with deals.

I’ve done every single thing on this list so I’m not suggesting that you do anything I haven’t done myself and found super useful.  Here goes:

Step #1: Use a memory jogger to create a lengthy list of people to have conversations with about private money. Do not say “Oh, they don’t have any money.” Don’t disqualify anyone…just write the names down.  Remember that everyone you know knows someone else, so you shouldn’t consider anyone off limits (unless of course its a person who you don’t want to associate with at all for some reason like your crazy uncle Joe. LOL!)

Step #2: Create a private money 60-second value statement (also known as an elevator pitch) as well as a presentation that provides an overview of your company and private money program. Really think through what your needs are (transactional funds for back to back closings, short term funds for rehabs, long term funds for rentals, all of the above?) and make sure to give some sample deals.

You want to be able to succinctly state within 30-60 seconds how you can provide value to anyone you meet and you also want to have easy to understand documentation to walk through with people when you sit down for an appointment.

Step #3: Make a plan to consistently reach out to 2 or 3 people every single week to have a conversation about private money.  There are many different ways to approach this:

• Request to get together informally for lunch or coffee to catch up — inevitably what will happen is you’ll ask “So what’s going on with you?” and after you listen first, the other person will reciprocate and ask what’s going on with you.  Here’s where you have an opportunity to share what’s going on in your real estate investing business and casually mention the private lending program.  The best way to share (in my opinion) is through story telling.  Telling a story about a private lender you’ve worked with before and how ecstatic they are about the program, or how you are looking to be a private lender yourself (and how that works), or even a story about someone you know who is working successfully with private lenders (if you’ve never secured a lender before).  Storytelling is powerful.

• Ask someone to give you feedback on your presentation — you’re going to want to do this.  This isn’t a “trick” ….the truth is that you really need to practice with people you feel comfortable with and get their input on how you can improve and also get used to the types of questions and/or objections that people will have.  The cool byproduct of this is that the person you’re presenting to will learn about your program and may actually be interested or know others who would be.

• Take the direct approach — I’d use this approach strategically.  It all depends on the relationship you have with the person and whether you’re pretty confident that the person will be interested and already is pretty knowledgeable about real estate investing.  I’ve definitely used this approach before and simply called and said something very direct such “Hey Rod, this may or may not be something you’re interested in, but I immediately thought about you….I’d like to share how our company is working with individuals who are tired of the ups and downs of the stock market to give them solid returns on their investments backed by real estate.  We’ve been getting a great response from folks and I want to make sure you know about it. When do you have 20 minutes available so we can discuss?”

Step #4: Follow up and use your presentation to share the key points about your private money program.  You’ll find that some people aren’t interested (or don’t have any funds to invest), some who just aren’t ready now, some who will be excited about the opportunity and are ready to go, and others who won’t invest but are willing to share with others (and may be a great source of referrals for you). Continue to follow up and share your progress as months go by because you never know when someone may be ready.

The key with this is consistency.  You have to make these conversations a priority because if you’re not talking to people, you’re not making progress.  Truth be told, my husband and I lacked consistency when we first learned about private money as a strategy so it took us quite a while to find lenders, but once we focused on it we found 3 in a short amount of time, and now we have others who are at various stages of interest as well. Again, its all about consistency.

You know what else?  It’s also about BELIEF. You have to know that there are people with money who will be overjoyed with what you have to offer.  People have been hammered by the stock market and money market and CD rates are laughable. You have to know this and be confident in these facts. If you walk around saying there’s no money out there or nobody would want to invest their money in you and your business, you won’t get any of it!

P.S. I’d be remiss if I didn’t mention that my private money mentor Patrick Riddle (along with Susan Lassiter-Lyons and Trevor Mauch) with the Private Money Blueprint provides a ton of free content that will provide you with a rock solid foundation to get out there and take action with regards to getting private money. You can also use their private lender presentation and customize it for your company just like I did (per my tip #2 above). You can get it all here.

Book Review: My Life & 1000 Houses by Mitch Stephen

Tuesday, August 10

Last week I finished reading my 24th book of the year….phew! My goal of reading 2-3 books each month is going really well.  I keep a running list of the books I want to read and interestingly enough, today’s review is for a book that was not on the list, written by a first time author I was unfamiliar with, and yet is one of my favorite reads of this year!

I met Mitch Stephen, author of My Life & 1000 Houses on Facebook.  I checked out his website 1000Houses.com and found the book title intriguing so I asked Mitch for a copy to review for my blog and he kindly agreed.  When the book arrived I thought to myself “Wow, this looks really long…I sure hope its good or its going to take forever to finish (if I finish it at all)!”  Even at 400 pages, I read this book in 3 sittings.  In fact it was such an engaging story that I could’ve finished it all in 24 hours but I wanted to ensure that I ate, slept, got some work done, and spent time with my family!

My Life & 1000 Houses, as you likely figured out by the title, is an autobiography.  It details the life of Mitch Stephen, a very successful real estate entrepreneur from San Antonio, Texas who has purchased more than a thousand properties over the past 10 years. Do you think maybe he knows a little something about how to achieve financial freedom and perhaps a little bit about real estate? LOL!  Yep, he does.

Three things I absolutely love about this book:

1. It is a phenomenal story of Mitch’s personal and business life — the good, the not so good, and the downright ugly
2. It provides a number of practical business and real estate investing tips and strategies
3. Mitch used the last ~150 pages of the book to share the most hilarious, sad, and inspiring stories from his real estate adventures

One other thing that is unique about Mitch’s book is that it includes lyrics to songs he’s written throughout the book in a really creative and effective way (oh yes, he’s an award-winning musician and songwriter too!).

I asked Mitch for an interview so we could talk about his book…why he wrote it, his thoughts on mindset and financial freedom, and what he’s learned throughout his real estate investing adventures (which are plentiful).  Rather than reading my Cliffs Notes this time, you’ll get a chance to hear straight from the source!

Check out my interview with Mitch Stephen by clicking on the icon below!

I hope you enjoy the interview!  If you’re interested in purchasing this book, head on over to MitchStephen.com or 1000Houses.com and grab a copy.  Mitch has offered to provide an autographed copy plus a complimentary copy of the soundtrack CD  to all of you. After you purchase, be sure to send Mitch an email at mitch@mitchstephen.com to let him know that you heard about his book from GoodFaithInvesting.com and you’ll get this bonus with your purchase, ok?

I’ll leave you with some of Mitch’s words of wisdom from the book:

• The learning is in the living.
• There is no easy money for anyone. Period!
• If we are limited in any way it’s because the message we are sending ourselves is wrong. Change your self talk and you will change your life!
• Every bad business move that doesn’t break us makes us smarter.
• Success seems to loom just barely beyond the gut-wrenching struggle.
• If you’re going to make a mistake, make it going full speed.
• Any percentage of something is better than 100% of nothing. You can’t go broke making a profit.

10 Quick Ways to Find Motivated Sellers

Tuesday, August 10

Britanny asked a great question over on my blog GoodFaithInvesting.com.  Britanny is new to real estate investing and is starting off by being a bird dog (property scout) for another investor.  She was looking for some ideas on how to find properties.  So here are the first 10 quick ways that came to mind!

10 Quick Ways to Find Motivated Sellers

1. Drive around neighborhoods looking for For Sale By Owner (FSBO) signs — knock on the door and talk to the owners! They have a sign on the front lawn and essentially are inviting you to contact them so don’t be scared!
2. Drive around neighborhoods looking for vacant houses or even homes that may be obviously occupied but look like a hot mess!  Write down the addresses, make notes on the properties, and then head on over to your computer and look up the owners in the public records and contact them.  I’ve heard of people even leaving post-it notes right there on the door encouraging the owner to contact them.
3. Make 1000 business cards and tell everyone you can about what you’re doing so you can get leads.  I’ve also seen people leave business cards in all kinds of interesting places and I’m sure you have too!
4. Leave flyers at unemployment offices….a lot of people there could be having trouble with their homes and may need a solution (a great ninja marketing tip from Greg Harris, the wholesale knockout king)
5. Check the newspaper or your local “flyer” or PennySaver paper — yes, its an old school method but there could be old school sellers who use it when they need to sell. Doesn’t hurt to look since so many others are looking on Craigslist only!
6. Speaking of Craiglist…use it. It’s free!  I’m personally yet to find a deal on Craigslist but I know plenty of people who have and I’m not giving up on it! Check out the Houses for Sale (by Owner) section as well as the Houses for Rent.
7. Call the numbers on those For Rent signs around your city…talk to the landlords…they actually may consider selling.
8. Referrals, referrals, referrals! Don’t forget referrals! (read my BiggerPockets article “Referrals: An Often Overlooked Way to Get Motivated Seller Leads” for more on this one)
9. Buy leads from Listsource.com, USLeadsList.com, MelissaData.com or other sources and mail postcards or letters to them — there are a number of different motivated seller lead types that you can focus on!
10. Be a walking billboard….have a nice polo shirt that says what you do! Or if its more your speed you can try a not-so-professional shirt and have an obnoxious attention grabbing t-shirt.  Different strokes for different folks!

Check out the actual post on my blog for some additional great ideas from those who commented.  Feel free to add some of your own too! 

Living Life on My Own Terms

Thursday, July 08

My friend and fellow Bigger Pockets blogger Julie Broad asked me to share the story of my recent escape from my 9-to-5 corporate gig of nearly 11 years to pursue full time entrepreneurship.

I thought I'd share it here as well and hope that it provides food for thought or inspiration for others.

Here's the link to my guest post on Julie's Life As Real Estate Investors blog.

http://lifeasrealestateinvestors.com/2010/07/living-life-on-my-terms/

I want to thank Julie for the opportunity to share it. Have a great week!

The Greatest Salesman in the World (Book Review)

Sunday, May 23

Over and over again I’ve heard rave reviews of Og Mandino’s The Greatest Salesman In the World.   Notable successful entrepreneurs, motivational speakers, and personal development focused authors have pointed to this book as a highly influential one.  192 reviews on Amazon.com with a four and half star rating…..I had to pick up a copy and see what the scoop was.

 

I really do enjoy a good inspirational novel.  In the past you may have heard me rave about Bob Burg and John David Mann’s The Go-Giver and then you may have read more recently how The One Minute Millionaire by Robert G. Allen and Mark Victor Hansen really pulled me in with such a great story.  This book was another goodie.  Less than 100 pages long and although it started off a bit slow for me, I stuck with it and it definitely got better.  The book is full of powerful life lessons that - if applied – can be life altering.  Some (or all) of this may be things you’ve heard before, but hearing and hearing again is key to transforming your thoughts and actions.

Anyway, in the story, a wise master named Pathros gave his young servant boy Hafid ten ancient scrolls which contained all the wisdom he would need to achieve his ambitions as a salesman.  The boy was supposed to read each scroll every morning and night for 30 days before moving on to the next one.  Here’s your Cliff Notes version of the wisdom contained in the scrolls.  I can promise you that if you want to read the book, reading the description of wisdom on the scrolls below won’t ruin the story at all, so go ahead and read on

Scroll I: Today I Begin A New Life

• Experience is comparable to fashion; an action that proved succesful today will be unworkable and impractical tomorrow. Only principles endure.
• Form good habits and become their slaves

Scroll II: I Will Greet This Day With Love In My Heart

• Always dig for reasons to applaud rather than scratch for excuses to gossip
• When tempted to criticize, bite your tongue but when moved to praise, shout from the rooftops!

Scroll III: I Will Persist Until I Succeed

• Always take another step. If that is of no avail, take another, then another. In truth, one step at a time is not too difficult.
• Never allow yesterday’s success to lull you into today’s complaceny — forget the happenings of the day that is gone (whether good or bad) and greet the new sun with confidence that this will be the best day of your life.
• One of the greatest principles of success: If you persist long enough, you win.

Scroll IV: I Am Nature’s Greatest Miracle

• You have unlimited potential. You can increase your accomplishments of yesterday by one hundredfold or more.
• Concentrate your energy on the challenge of the moment and your actions will help you forget all else.

Scroll V: I Will Live This Day As If It Is My Last

• Avoid with fury the killers of time. Kill procrastination with action.  Bury doubt with faith. Dismember fear with confidence.
• Give thanks each sunrise for the priceless giftof a new day. Remember that time cannot be banked today to be withdrawn tomorrow.

Scroll VI: Today I  Will Master My Emotions

• Weak is he who permits his thoughts to control his actions; strong is he who forces his actions to control his thoughts. Master your moods through positive action.
• Bring joy, enthusiasm, and laughter to your customers and they will react with the same and produce a harvest of sales

Scroll VII: I Will Laugh At The World

• Whenever good humor threatens to depart from you for any reason, remember “This too shall pass.”
• Only with laughter and happiness can you truly become a success and enjoy the fruits of your labor.

Scroll VIII: Today I  Will Multiply My Value A Hundredfold

• In setting your goals, consider your best performance of the poast and multiply it by a hundredfold
• Always raise your goals as soon as they are attained; always strive to make the next hour better than the last; always announce your goals to the world

Scroll IX: I Will Act Now

• Your dreams are worthless, your plans are dust, your goals are impossible.  All are of no value unless followed by action.
• Only actions determine your value in the marketplace. Walk where failure fears to walk. Work when failure seeks rest. Talk when failure remains silent.

Scroll X: I Will Pray For Guidance From God

• Ask for guidance so that you can acquire ability equal to your opportunities
• Ask for help to count your blessings each and every day

Wow…that may have been my longest book review ever.  Hope you still enjoyed it!  There’s so much more in this book even though its short so I encourage you to check it out for yourself.  You’ll be able to read it in one weekend if you get just one idea or you’re inspired to do just one thing differently, it will be worth it.

Unconventional thoughts on landlording

Monday, February 01

Repost from 1/31/10 entry at my blog GoodFaithInvesting.com

I don’t blog much about my landlord experiences, but a conversation I recently had with an investor from St. Louis (with 30+ years of real estate investing experience) inspired this post. We were talking about our philosophy regarding landlording and it was a breath of fresh air to speak with someone who shared a similar perspective.

Before I go into my unconventional thoughts, it may be helpful for me to disclose a few things:

• We have not owned (and have no future plans to own) rental properties in war zones – low income neighborhoods, yes. War zones, no.

• We’ve had both deadbeat tenants (had to evict them) and wonderful tenants

• We’ve had both Section 8 tenants and non-Section 8 tenants. Our preference is to have Section 8 tenants who are responsible for a healthy percentage of their monthly rent.

So here’s my take on being a landlord — and I can tell you by the looks of the neighborhood of our most recently purchased rental property (as well as from conversations with the leaders within the neighborhood), that these thoughts are unconventional:

I’m a firm believer that you reap what you sow.  If I choose to be an excellent landlord, I will attract and keep excellent tenants.  To me, being an excellent landlord means:

• Rule #1: Treating my tenants like human beings instead of an income stream — showing that I care about their well-being, comfort, and safety in my home (this rule applies regardless of whether the tenant is receiving government assistance or not — doesn’t matter).  Doing small things like sending holiday cards or leaving a voicemail to say hello every once in awhile!

• Rule #2: Ensuring that the home looks nice — just because my tenant may be a Section 8 tenant, I will not assume that the person will treat my home in a sloppy manner.  I present a home in excellent condition and expect excellence in maintenance from my tenants.   If I present a home in sloppy condition, my tenant has no reason to believe that I have any pride in the condition of the home and may show the same blatant disregard.

• Rule #3: Being willing to do select low-cost upgrades within the home as the tenant proves to be an excellent one — simple things like decent window treatments or a low-cost security system

• Rule #4: Providing instructions on home ownership/maintenance — giving tips on things that a tenant may not know how to deal with if they’ve never lived in a home before

• Rule #5: Refusing to be a completely “hands off” landlord even with a property management company in place — I need to know not only that business is being handled the way I want it to be handled, but also that my tenants are being treated with respect.

Even when the Housing inspector came to our property before the tenant moved in, she commented on how nice the home was and how any tenant would be lucky to stay there.  It’s not like we did much special to the place…we made sure it was clean and in nice condition! What does that tell you about how many other landlords in the area are treating their properties/tenants?

My husband and I have plans to make a significant difference in one or two lower income neighborhoods in our county over the next 10 years and the great news is that we’ll do well (financially) by doing good (for others).  It’s a win-win!

Anyway, that’s all I wanted to share.  Never forget that you reap what you sow.