Finding financing is one of the biggest challenges for most real estate investors. I previously wrote How to Generate Private Money, where I broke this process into six steps; here I will break down the 5th and 6th steps (See: Steps 1-2, Steps 3-4) of dealing with private lenders.
Step 5: Handle objections, ask for referrals
Goal: Overcome objections to optimize success and get referrals
Solution: Anticipate objections and have a solution to handle them. You will find that the same 2 or 3 objections come up 75% of the time and you have to be able to handle them. Common objections are: What if the deal flops, how is my investment secured, what is in it for me, why real estate, etc.
Solution 2: Always ask for referrals. If they do not invest, ask them who they know that would be interested in your opportunity. Just simply ask, “Do you know anyone else who would be interested in a great return on their money?”
Do’s and Don’ts: If they give you an objection you cannot handle, do not stumble around. Simply tell them you do not have an answer but you will get back to them on that. Then ask them if that is the only thing holding them back from moving forward. Thus, you are getting them to say Yes, if you can handle that objection.
Step 6: Treat them like your grandmother
Goal: Get them to like and trust you.
Solution: Pay on time, give them first chance to invest in a new opportunity, & tell them you do not offer this to everyone. Give them periodic updates on the property so they stay comfortable. It is also a great way to ask for referrals and get them to invest more.
Do’s and Don’ts: Continue to have contact with them. Do not wait 6 or even 3 months in between communications. Drop them an email or call just to see how they are doing. This is about trust so show them some respect and a little love every once in awhile.
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