"Help! I Need Private Money..."

Does this sound familiar at all to you? Maybe you've perused a few online forums or craigslist.org and saw some posts like:

"Need partners for real estate project - 25% ROI"

"Earn 10% secured return on your money"

Are you guilty of this yourself? If so, how are the results?

Do you get a lot of tire kickers? Spammers? Loan sharks?

I can't think of many worse ways to get private money than to randomly post your deal online somewhere. Most of the websites that claim to match investors with projects are a waste of time. In theory they are good, but practically they won't get it done for you in most cases (there are exceptions, but rare from what I've heard through many sources for REI private placements for SFH, multi-family, etc).

Why is it not a good idea to post your projects online and hope and pray for a response?

Reason #1: Shouting into the wind. You and an infinite number of other anonymous internet voices are all screaming out from the 1's and 0's of the matrix with a money making opportunity. What about that African fellow who wants to move his deceased father's fortune into your bank account and let you take a small fee? Yep, all of those yahoo's and knuckleheads are putting forth their message in the same mediums and venues that you are. Why would you want to put yourself in the same category as them in any prospective investors mind?  Successful marketing, no matter for widgets or private money, is about standing out not fitting in.

Reason #2: You are being 'needy'. Need never begets private money. People only want to invest with those that don't need their money. Would you? You must always strive to create demand for your real estate investment opportunity. Attract people to you. Remember: people do NOT like to be sold - but they do like to BUY.

Reason #3: Securities laws. When you post your investment opportunity to the general public in this way, you can catch the attention of securities regulators. Technically, saying "earn 10% secured returns on real estate" in an online forum could be considered a 'general solicitation' and put you in violation of securities laws unless you have a registered security.

And, perhaps the most important reason you shouldn't resort to random deal postings:

You can and should get the money on your terms.

If you post your deal online somewhere or with a deal exchange gateway of some kind, you are putting the weight of the deal in the other person's (potential investor) favor.

When somebody comes to me for a hard money loan, I get to dictate the terms (which are quite onerous).

When somebody comes to me and wants to invest money with me in my real estate private placement, I have much more control of setting the terms of the deal.

Conversely, if I got to a bank and ask for their money, then I have to take whatever terms they're going to give me. The same holds true for posting in a deal exchange type program: you post your deal and then you accept the investors terms. Less than optimal most of the time.

While I don't inherently have anything against these types of deal exchanges, I do want you to have the most success in the least time raising the money you need. In the long run and the short run, it doesn't make much sense to raise private money and then not make any profit on the deal. You are the investor, the creator and the deal originator and YOU deserve to make your money too.

Take this advice: the more you 'need' private money, the less you get. The less you 'need' private money, the more you get.