4 Simple Steps to Getting Private Money

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.