Don’t Ask for Money on Facebook.

     Private funding is a relationship business. If you are seeking funding you are not likely to be very successful asking on social media. I’m not saying you won’t reach people with money on Facebook, you most certainly will, but you are more likely to alienate people in your circle or near your circle of influence, who might have been open to helping, than you are to attract a funding partner. Those in your circle of influence are your best prospects—don’t burn those leads with an ill-advised post. All too often, pleas for money on social media reek of desperation—an inelegant presentation can look like begging. When was the last time you were excited about meeting someone who was desperate? Do you want to partner with someone who is begging? Cultivate your relationships. Nourish them. Talk about what you do on social media. Share your journey, your success. Give your prospects a reason to come to you, to discuss the opportunities you can provide. Don’t ask for money on Facebook.

     Trolling for money on social media is a poor strategy. If you insist on learning this for yourself, at least, try not to expose yourself to a potential investigation or lawsuit. When you post a "no risk" or "no brainer" deal (I really hate those phrases and have railed against using them in previous blog entries) you are implying that yours is a safe investment. It could be taken as a promise or, worse, a guarantee, when you post a specific rate of return on your deal. What do you think might happen if your guaranteed investment fails to perform? When posting on social media you may be violating the lending laws of all 50 States, the CFPB rules and the SEC rules all at the same time. (Ignorance of the law will rarely shelter you from the consequences of violating it.) If you feel compelled to post (I strongly encourage you to develop personal relationships instead) do not be specific about the returns your investment might yield. You might state that high yields or above market rates are possible. Your goal is to entice interested parties to contact you. When they do, you can be more specific about the possible yields—you now have a relationship. If you insist on specifying a yield in your post make it a range of possible returns that you would be happy to discuss with interested parties. If you are posting on a general page your goal should be to get a response. You can explore what your respondent is looking for and how you might help them achieve that in further communications.

     If you are posting on a forum that is tailored to active investors/lenders you will need to provide as much detail as you can about your scenario to get responses from those with experience (beware, the risk of alienating these people is greater than the possibility of attracting them). Indicate if you are seeking a joint venture, a loan, or would welcome either. State how much you are seeking and for how long you want the funds. Seems obvious, right? Many people fail to do this. They often give scant details about purchase price, repair cost, and ARV but do not indicate how much they are seeking or their exit strategy.

     Make sure your post is accurate. Proof read before you hit enter. If someone contacts you and there is a mismatch between the offer you posted and your actual deal, you may have poisoned that well and a few you may not even know about. Anyone considering your proposal is looking to see if the deal is credible but they are also evaluating you as a potential partner. Are you honest? Do you pay attention to detail? Misspell a few words or slide a decimal point and you may never learn of a potential lender's interest. Make a strong enough impression and they may write you off forever. If you post on a forum where there are a lot of potential and/or active lenders and your post is particularly inept, it may become used as a reference for others—an example for newbies of what to avoid. You will be remembered and it may be very hard to rise above the poor impression you have made.

     Your best prospects on investor pages are those who have previously considered lending. They have funds to lend because they have been successful. They may have strong connections with several others on the forum because they have done business with them. They may be familiar with the applicable laws. You are asking people you don’t know well to write you a large check. Their primary concern is if they will get paid back. They care about the law. If your post gives the impression that you do not know the law, or do not care about it, you will lose these people. Alienating a few well-connected people could set you back further than you can imagine. 

     If you are posting on social media pages, you are probably seeking people who do not lend for a living, maybe someone who has never funded a deal before. It doesn't take much to scare these people away. You probably know many people who are in a position to fund your project (though they may not have revealed that to you). Those people are likely to know many more who could fund your project. Take the time to cultivate relationships instead of just posting on social media. It is worth the effort. If you strike a deal and perform as you stated (or better) you may find you have a financial partner who will fund deal after deal and may lead you to other potential lenders. You may never have a problem raising funds again.

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