Just when I thought I had all the aspects of raising private money figured out, I get slapped across the face with a new lesson. I suppose I deserved the slap across the face given I got overconfident in thinking I had “learned-it-all”.
This lesson didn’t come in the form of a sales technique or anything of that nature, it simply came from “who” the potential private money lending demographic is. Maybe this is just me, but I’ve always been under the impression that you should be targeting the, how do I put this politely… the “generation with more life experience”. These are the people that have had ample time to save money, and more than likely, have liquid funds where they simply want to put somewhere and get a steady return on them.
This “thought” on my part was recently blown to shreds..
Private Money For Real Estate Comes From All Directions
Before I get into the meat and potatoes of the story, let’s first go over a bit of background. Although this is not the point of my article, it does provide some valuable insight about how private money connections can come from ALL aspects of your life.
One of my wife and I’s really close friend group members got a boyfriend about 6 months or so ago. I’ve gotten to know him through church, “game nights”, and just causal hang-out sessions. It’s always been a good time, but the furthest thing from my mind was “Hey, this could be a potential private money lender!”. He wasn’t a doctor. He wasn’t a lawyer. He wasn’t in a high-up management position at a Fortune 500 company.
Lastly, he was not in the “generation with more life experience” category…
Private Money for Real Estate Comes from All Ages
This relationship which had formed through a friend was with a 23 year old! I don’t want to make a sweeping generalization here, but my stereotype and mindset towards this age range falls into a few different categories:
- Debt Ridden and/or still in school.
- Has no interest in their financial future. “I’m young, I’ll worry about it later” type attitude.
- Simply has not had enough time to accumulate any sort of investment income.
Strike 1! Strike 2! Strike 3! I was out! This individual proved my stereotype wrong on all three accounts.
Not only was this person debt free (never went to college), but he told me how he had set up a ROTH IRA while he was in high school! I don’t know about you, but in high school I would have given someone the “Are you even speaking English?” look had they brought up a ROTH IRA to my attention. On top of all this, he had saved some a solid chunk of change that put him in a category of being able to do some real estate private lending.
Taking Action Generates Most of the Interest
What do I mean by this? The 23 year old learned about what I did by both hearing me causally talk about it and by seeing a property ‘before’ we started on it, and ‘after’. Because his girlfriend is apart of my demo/clean team, she decided to take him through the property during one of their dates. They were in the general area so she decided to drop and show it to him.
While this is not always the case, by simply taking action and getting product (houses) on the market, there will be instances like this where marketing is being done for you (whether intentional or not doesn’t matter) for free. It’s not like I told the girl, Danielle, to go “get your boyfriend interesting in real estate and private lending!”, it was just one of those things that happened.
Point being, this event would have had zero chance of happening if I had never taken action in the first place.
Meeting with a Potential Private Money Lender
At the time of me writing this article, I just met with this potential investor last night. Him and his girlfriend Danielle were on a date so they invited me out afterwards for drinks. We met at Applebee’s and had a great conversation. This brings up a few points (keep in mind, each one of these points could be a blog post in and of itself)…
- Don’t just start ramming stuff down their throat about you and your company. Let them dictate the direction of the conversation.
- Have Marketing Material. Right at the beginning of the conversation, I slid him my marketing packet and told him this should really help him out with anything we may miss out on during the conversation.
- Don’t BS*. Be honest. Don’t make yourself sound bigger than you are. Don’t make it seem like your company is worth millions of dollars (if it isn’t). Tell the investor the current status and where your goals are.
* This is a huge and common theme through the podcasts. If you are not listening to them, why not?!?!?!
Click here to listen to the 16th Episode of the BiggerPockets Podcast, with me!
When the meeting was done and over, he had a much better understanding of how it all worked and was very interested. Being 23 years old and in the position he was, he’s obviously wise beyond his years, so he didn’t make any rash decision there and then. What did happen was that he was going to “talk it over with his parents”. This is what I hope will be the beginning of a “domino effect” for word-of-mouth marketing. I’ll just have to sit back and see where this all goes.
Lesson Learned from this Experience
Private money is floating around you at all times. Even if you are hanging out with or having a conversation with someone younger, you just never know. Don’t be like me and assume that the younger generation has no ability to get involved in private money real estate lending.
I think I would probably argue this individual was more of a needle-in-the-haystack type in terms of his financial uniqueness, but even so, it still doesn’t take away from the big lesson I learned of younger does not equal no money to invest.
Keep your ears open. As I learned, the eyes can be very deceiving.
Photo: Unhindered by Talent