Raising Private Money Tips: What’s a Buyers List Without a Money List?

Raising Private Money Tips: What’s a Buyers List Without a Money List?

An old time Real Estate Investor once asked me how many real estate deals could I do if I had an unlimited supply of money? It’s really a scalability question. Can you do 12 rehabs? 24? 48? You get the idea. Money is the gasoline for the machine; it’s simple, if you have plenty of capital you could do more deals.

Then how come wholesalers and rehabbers tend to focus more on a buyers list than a money list? My mentor was just trying to get me to think bigger. Most of us just start out as a function of our own money. Then we might try to partner with someone, especially when we’re new and risk averse. But we usually take awhile before we start to incorporate using other people’s money into our business model, and if we do it’s usually one investor to one deal. I borrowed money on a small scale and increased the number of deals I did. I also lent other people money, which got the word out for people to do the same for me. You keep your word, pay it back on time and chances are, people will do that for you. It comes down to integrity.

Most of us never think big and actually start to pool real money and do a large commercial deal. The only real difference is that it’s just more zeros.  If the fundamentals work, they work. Whether it’s a portfolio of Single Family Residential homes or apartment complexes, if a rehabber or wholesaler can do one they can most likely do the other. It’s nice to have enough capital to really scale your model, obtain the property, improve it and refinance it later to take out the initial investors. Then eventually you may not even need a buyer’s list. Now wouldn’t that be interesting?