Raising Private Money Flyer

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Raising Private Money Flyer

Hector Perez
Flipper/Rehabber · Houston, TX · Member since 2012 · 176 posts · 75 votes

Hello BP,

I am currently compiling a flyer and a credibility kit to raise funds for my real estate investments.

Just need some feedback for what kind of information do you suggest to include in the Flyer (one page handout) that I can give to potential lenders at the local REI meeting.

I look in BP website, but I was not able to find the information I am looking for.

Your comments are gladly appreciated

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Sid Siddiqui
Real Estate Investor · Bedford, TX · Member since 2014 · 83 posts · 31 votes
12y

@Hector Perez The way I have been doing is through presentations.

My very first time in 2010 I raised $50k was at the REIA meeting where I represented my company, our business model, mission statement, investment opportunities (deals) that I have and in the pipeline, estimated profits shown in numbers backed by pictures of the property and lastly explain why we need to borrow and ROI.

From there, one thing leads to another and the word got out. Now I don't even have to present at the REI meetings. I have investors call me and I just schedule a one on one with them and explain the terms and ROI.

My Investment Opportunity slides looks something like this:

- Investing Range - 25K to $250K

- Times frame:

Short term (6 to 12 Months)

Long term (1 to 5 years)

- Annualized Rate of Return - 10%

Hence I would suggest instead making the flyers, which can be a little risky when ask for money and may not be effective way. Ask for 10 - 15 minute slots at the local REIAs and build your brand and reputation first.

Just my 2 cents :-)

Cheers!

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  • Brie SchmidtBusiness Member
    Moderator
    Real Estate Broker · Chicago, IL · Member since 2013 · 6k+ posts · 5k+ votes
    12y

    @Hector Perez - I would focus on your past REI accomplishments and then specific details about the deal you want money for. Exit strategy, ROI, comps, ect

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    4Reply
  • Paul James
    Residential Real Estate Agent · Austin, TX · Member since 2014 · 74 posts · 26 votes
    12y

    Hector, are you looking to solicit your investment experience or your financials standings with goals? @Hector Perez

    2Reply
  • Hector Perez
    OP
    Flipper/Rehabber · Houston, TX · Member since 2012 · 176 posts · 75 votes
    12y

    @Brie Schmidt . Thanks for the input. I really like the suggestions for past accomplishments. I don't have a deal yet to pitch, but I can mentioned what I am looking for to buy and the strategy

    @Paul James . the flyer is based on past accomplishments and what I am planning to do. Just wondering what others use so I can benchmark from it

    2Reply
  • Brie SchmidtBusiness Member
    Moderator
    Real Estate Broker · Chicago, IL · Member since 2013 · 6k+ posts · 5k+ votes
    12y

    @Hector Perez Then focus on past accomplishments. You have done X number of deal. You have given and average ROI of X. Ect.

    Also include what you want from the investor. For X dollars I will give you X% in X months or X % of the equity at sale

    Podcast Guest on Show #132
    Second City Real Estate4.821 Reviews
    WebsiteView Page
    1Reply
  • Jeff Rabinowitz
    Investor/Landlord · Farmington Hills, MI · Member since 2011 · 1k+ posts · 1k+ votes
    12y

    @Hector Perez

    3Reply
  • Wendell De Guzman
    Investor · Chicago, IL · Member since 2013 · 2k+ posts · 1k+ votes
    12y

    I totally agree with @Jeff Rabinowitz - a lot of private lenders or those with money are the silent types and you will never guess they are loaded with money (they drive old cars and live in modest houses). And a flyer in REIA wanting money will not really impress them (how do I know? I am a private lender now)

    The key in raising money is not to be overt about it. Talk excitedly about your latest real estate deal or the latest property you've put under contract. I did this and in my local REIA, a doctor approached me...impressed I have 11 wholesale deals. He begged to take me to lunch and he explained he wanted to lend me money. However, even after I showed him deal after deal...after deal, he did not really invested until after the 5th deal. I guess he wanted to test me how persistent I can be.

    However, once he invested, all I needed to do is call him and he invested in practically all my acquisitions. So maybe scrap the flyer asking for private money. Have a flyer for the latest deal you're working on instead.

    6Reply
  • Hector Perez
    OP
    Flipper/Rehabber · Houston, TX · Member since 2012 · 176 posts · 75 votes
    12y

    @Jeff Rabinowitz and @Wendell De Guzman thanks for the input.

    What I was thinking was to give an elevator Pitch at the local REIAs and tell people I will be in the back if they have any questions.

    I will hand out a flyer to tell them who I am and then follow up by tel, and email, set up a meeting to go over what I do and deals I have.

    Do you think it will work or scratch the idea of the flyer?

    1Reply
  • Jeff Rabinowitz
    Investor/Landlord · Farmington Hills, MI · Member since 2011 · 1k+ posts · 1k+ votes
    12y

    @Hector Perez

    3Reply
  • Account Closed
    Dallas, TX · Member since 2013 · 4k+ posts · 744 votes
    12y

    @Hector Perez,

    Most experience investors will want to know how you will repay them and what will protect their investment plus how much skin you will have in the deals...


    Joe Gore

    1Reply
  • Ned CareyPro Member
    Moderator
    Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
    12y

    Raising money is often subject to SEC requirements. This is particularly true if you are soliciting money from people you do not know. Handing out flyers or putting adds on your website soliciting money, is not only probably not very effective, it may put you under the scrutiny of securities regulators.

    If you are looking for hard money lenders, they are not hard to find, just ask around. There is a list somewhere here on BP. On the other hand Private lenders are just that. People who you know and trust you enough to lend you money. You don't find them by handing out flyers. You find them by talking about what you do with your friends and associates.

    4Reply
  • Bill Gulley
    Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
    12y

    From Ned's comment about SEC, I strongly suggest you never put anything in writing soliciting funds and as others pointed out, it's not the professional way of attracting investors. If I got some flyer (as I did on my windshield at a RE event) I wouldn't hold that for 5 seconds after seeing what it was.

    Soliciting money is a very touchy thing. Wendell is absolutely right, don't even ask for money, let it be known you have deals and they will approach you! I actually enjoyed making some beg a little.....wasn't that I'm sadistic but make them demonstrate they really want in. There are always risks, if things start going down hill a little reminder of "you begged to get into this one" might make things easier to control the deal. New investors get nervous and you'll need to manage them too, if they weren't motivated on their own they will be harder to manage along the way.

    Soliciting investors can get you in hot water, there are folks out there, like your competition that might just turn you in. You don't want to get on that radar screen. The other thing, putting things in writing can be relied upon as a representation for the investment, you certainly don't want to go there!

    Talk one on one, sell yourself not the deal. :)

    3Reply
  • Sid Siddiqui
    Real Estate Investor · Bedford, TX · Member since 2014 · 83 posts · 31 votes
    12y

    @Hector Perez The way I have been doing is through presentations.

    My very first time in 2010 I raised $50k was at the REIA meeting where I represented my company, our business model, mission statement, investment opportunities (deals) that I have and in the pipeline, estimated profits shown in numbers backed by pictures of the property and lastly explain why we need to borrow and ROI.

    From there, one thing leads to another and the word got out. Now I don't even have to present at the REI meetings. I have investors call me and I just schedule a one on one with them and explain the terms and ROI.

    My Investment Opportunity slides looks something like this:

    - Investing Range - 25K to $250K

    - Times frame:

    Short term (6 to 12 Months)

    Long term (1 to 5 years)

    - Annualized Rate of Return - 10%

    Hence I would suggest instead making the flyers, which can be a little risky when ask for money and may not be effective way. Ask for 10 - 15 minute slots at the local REIAs and build your brand and reputation first.

    Just my 2 cents :-)

    Cheers!

    6Reply
  • Bill Gulley
    Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
    12y

    And therein is another issue, saying 10%, that is a representation, made in public, to witnesses. So, are you asking for money or are you simply saying what past deals were? That's where you need to be careful.

    If you hold a seminar you can certainly talk about you, your company and past success. You can say "we made 18% ROI on this project that we split with our investors". That is stating a fact of past performance.

    You also need the old disclosure of our past performance is not a representation on future performance.

    If you are showing some great returns and simply say you split those very favorably toward the investor, that will lead to inquiries as Sid mentions and then move to a one on one conversation.

    And, when the word gets out, you may need to get busy keeping all those interested coming back! :)

    2Reply
  • Darrell Shepherd
    Rehabber · Smyrna, GA · Member since 2013 · 864 posts · 510 votes
    12y
    Is it a securities violation to say "I want to borrow money?"? I don't know, but wouldn't think so. It's a violation to solicit investments, but asking people to borrow money is a little different IMO. I'm no expert, though, I've always found mine through word of mouth. Even if it is, I can't imagine FINRA doing much more than telling you to stop at that scale. I've borrowed well into 7 figures from individuals. The first few are the hard ones, after you pay a few back the lenders brag to their friends and other people just notice what you're doing and want to be involved. My agent asked me a few months ago if she could loan me money, then asked if I could do the same for her mom. As far as finding the first one(s) the above advice is solid. You need to show previous deals with pics and figures and numbers for credibility and a current deal for them to consider. It's best to start with people you know, but if the deal's right the money is always there. I think I paid 22% interest on my first loan. Sometimes it's the availability of the money more than the cost of the money. That same lender was loaning at 12% a year later. I personally get annoyed when people present stuff with a lot of ambiguity: "I can buy these 5 lots super cheap, we can flip them, develop them, or build on them". Does nothing. "I have 5 lots, it'll cost $5k per to buy, $8k per to develop, and they should sell for $25-$30k each when we're done. 6 months start to finish. -That gives me something to analyze and see if its worth funding. That's what you want to give an investor. I sent one this morning to a guy with pic of the property, his note and deed all filled out with his name and the numbers we discussed on the phone, purchase price (I paid cash for it last week), scope of work with estimates, ARV and how I got there. This will be his first loan with me, but it's in the bag I think. I pitch mine at 2pts and 12%. No payments, up to 70% ARV. 12 mo max with a 6 mo expectation on the cash out. Pretty easy sale if you can show you've done it before and back up your numbers.
    2Reply
  • Sid Siddiqui
    Real Estate Investor · Bedford, TX · Member since 2014 · 83 posts · 31 votes
    12y

    @Bill Gulley Good feedback, guess I will need to make some adjustments but almost all of my meetings are personal one on one basis now and they are usually good referrals from friends/private investors that have made good returns in the past. Appreciate your comment.

    @Darrell Shepherd - Thank you, and I agree with you completely. I keep everything clear and concise with my lenders. I tell the story in a way that is all about them - No ambiguity what so ever. You have to build relationship based on trust and that is why my guys love me and keep coming back and bringing their friends.

    If I may "quote" what Bill said:

    "And, when the word gets out, you may need to get busy keeping all those interested coming back! :)"

    Love it guys!!

    Thank you so much and so much to learn!

    2Reply
  • Bill Gulley
    Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
    12y
    Originally posted by @Darrell Shepherd:
    Is it a securities violation to say "I want to borrow money?"?
    I don't know, but wouldn't think so. It's a violation to solicit investments, but asking people to borrow money is a little different IMO. I'm no expert, though, I've always found mine through word of mouth.

    Borrowing money is what business entities do when they issue a bond, a note is and can be a bond, depending on how it is originated and offered it can be exempt. Bottom line, yes, running around asking people to loan you money can be a security violation.

    Borrowing funds from someone you have a relationship with can be the exemption, soliciting from the public is a different matter.

    That's why I suggest you simply show your success and allow them to approach you, as they will, then go one on one, privately, no written materials for them to carry off thinking they have some representation, all they should get is the note and security agreement and perhaps disclosures applicable to what is to be done. :)

    1Reply
  • Hector Perez
    OP
    Flipper/Rehabber · Houston, TX · Member since 2012 · 176 posts · 75 votes
    12y

    Thanks to all for the great suggestions and feedback.

    I am going to put focus on the Elevator Pitch for the REIA and one on one presentation of past accomplishments.

    Great information

    1Reply
  • Trevor Rutherford
    Wholesaler · Dayton, OH · Member since 2013 · 172 posts · 16 votes
    11y

    @Jeff Rabinowitz and to all.  Here is the catch 22 that always confuses me.  If you are trying to go after a listed property using OPM.  1. The Realtor wants to see a proof of funds letter before it will even be under contract.  2. How do you have a deal to present to a potential private lender if you don't have it under contract to begin with.  

    1Reply
  • Jeff Rabinowitz
    Investor/Landlord · Farmington Hills, MI · Member since 2011 · 1k+ posts · 1k+ votes
    11y

    @Trevor Rutherford, you don't have a deal if it is not under contract. You do not always have to provide proof of funds to get an offer accepted. It may be possible to have an offer accepted contingent upon providing a pof within a short period of time. This will depend on the seller, the agent, and the predominant practices in your area. There are hard money guys who are willing to provide pof letters before a deal is accepted.

        If you do not have a contract you have a dream. That is alright. All deals begin as dreams but I have neither the time nor the inclination to analyze lots of deals for novice investors. Too often, proposals from novices are unrealistic. Anyone can make a compelling presentation for a profitable deal if they are proposing offering 1/2 of the value (or 1/2 the listing price) of a property but the chances that offer will be accepted are very small. I might take a cursory look at such a deal if asked in a polite manner but, frankly, the potential borrower will make a poor impression by asking me to do so and will probably make it less likely that I would work with them when they find a good deal (especially, if they have previously presented multiple unrealistic proposals). On the other hand, an experienced investor, especially one I have worked with before may need only give me general details of offers they are making to get my preliminary approval before their offers are accepted.  

        How does one get the experience? Persistence, creativity, and knowledge of your market. Every experienced investor was once faced with doing their first deal. It can be done.

    4Reply
  • Trevor Rutherford
    Wholesaler · Dayton, OH · Member since 2013 · 172 posts · 16 votes
    11y

    @Jeff Rabinowitz  Would that apply to a commercial cash flowing property as well?

    0Reply
  • Jorge Poveda
    Chicago, IL · Member since 2015 · 13 posts · 3 votes
    11y
    Originally posted by @Hector Perez:

    Thanks to all for the great suggestions and feedback.

    I am going to put focus on the Elevator Pitch for the REIA and one on one presentation of past accomplishments.

    Great information

     I realize this post is a little dated, but just wondering how this is going for you?  Hopefully well.

    0Reply
  • Hector Perez
    OP
    Flipper/Rehabber · Houston, TX · Member since 2012 · 176 posts · 75 votes
    11y

    @Jorge Poveda

    I had my flyer reviewed by a SEC attorney and I send the mailer to people who had lend in the past 12 months. I was able to meet several people which some of them are currently investing in my deals

    4Reply
  • Jorge Poveda
    Chicago, IL · Member since 2015 · 13 posts · 3 votes
    11y
    Originally posted by @Hector Perez:

    @Jorge Poveda

    I had my flyer reviewed by a SEC attorney and I send the mailer to people who had lend in the past 12 months. I was able to meet several people which some of them are currently investing in my deals

     Thats fantastic, congrats!

    0Reply
  • Sanjay A.
    Real Estate Agent · Allen, TX · Member since 2015 · 5 posts · 8 votes
    10y

    Hector - Would you be willing to share your flyer and what you are offering to investors?

    0Reply
  • Bryan Hancock
    Investor · Round Rock, TX · Member since 2010 · 8k+ posts · 4k+ votes
    10y

    For everyone's benefit it is exceedingly easy to find private money chasing deals in Texas right now.  There is an abundance of money chasing deals right now.  I'm not saying this to be a Debbie Downer.  I just mention it because the results are likely to vary by location.  

    I'm glad it worked out for the OP.  Best of luck to you.  I'm glad to see some getting off their a$$ to make it happen instead of being stuck in constant neutral.  

    0Reply
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