The exact email I used to land private money funding
Hi BP; I've been getting alot of questions asking how I got private money for my last deal so I want to use it as an opportunity to share so that others can do the same.
In many markets today, deals are so competitive that offers with financing contingencies won't even get looked at. This is particularly true when looking at fixer uppers. This makes cash a must. Alot of people also run into the problem of not being able to find cash quick enough after they find a deal, and aggressive sellers agents will even require proof of funds when submitting an offer. I recommend getting funding lined up PRIOR to submitting offers.
Disclosure: Prior to finding private money I had done 3 deals, all of them with conventional financing which were "live in flips" where I would buy a fixer, rehab it while living in it, then later sell. I would always share what I was doing along the way so my personal network knew about my previous real estate deals.
How to get private money... Here is the exact email I sent out to a few people with very good success
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Subject: Housing Investment
Hi XXXX,
I'm not sure if this is an investment you would be interested in, but wanted to run it by you to gauge interest or input. I'm planning on doing another property flip.
With current market conditions, the niche I want to be in is the 3-4 bedroom, 1.5-2 bath single family home within 30min from downtown Bellevue and Seattle with an after renovation value in the $300-350k range. The product we'll provide is a very good starter home for young families, or professionals looking to own a home rather than rent.
I'm finding homes in need of renovation in the better parts of *CITYNAME* and *CITYNAME* that fit the bill in the 190-230k price range. Typical deal would look like
- Purchase $210,000
- Renovation budget: $30,000
- After renovation value: $309,000
- Cost of sale (8%): $25,000
- Holding costs for 3 months: $6,000
- Profit: $38,000
- Target Timeline: 8 weeks renovation, 6 weeks sell&close; total 3.5 months end to end
My friend and contractor (he's done all my previous work), XNAMEX, is partnering with me. He is going to own the renovation work. My part is buying/selling/financing and design. XNAMEX is bringing $40,000 of cash and I will be bringing in $30,000. This leaves each of us with a padding of reserves.
Our original plan is conventional financing with 20% down, however if we could come in with an all cash offer we will have better negotiating power and the timeline to purchase will be cut down by nearly a month.
I'm wondering if you would be interested in being an investor and providing the upfront acquisition capital in a deal structured like this:
- Investor provides home acquisition capital
- XNAMEX & Christian provide renovation capital
- Investor is paid 12%/yr interest based on time money is borrowed
- Home sale price distribution order
1. Investor principle
2. Investor interest
3. XNAMEX & Christian principle
4. XNAMEX & Christian share profit
I would love to hear your thoughts and input; and if you have time today or tomorrow I'd love to chat.
Thanks,
Christian Wathne
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This is the exact email I used to line up funding, and I was able to get conversations that lead to Yes's very quickly. The key parts of this email were
- Very specifically showing how the investor would win, including how much money they would earn and how their investment would be protected based on the payout order
- Very specifically showing what exact types of homes we are looking into
- Showing what a deal would look like including timelines and costs
- Describing the range of dollars we are talking about so there are no surprises regarding how much funding would be required
- Keeping it simple
From there I went house searching and was confident being aggressive. Feel free to copy this email and tune it for your needs. Let me know what you think