Never before has there been such an exciting, effective method for financing residential real estate investment property. If you are an investor, or would like to be, you must take a few minutes and read this brief introduction to one of the most flexible, powerful, creative ways to find the money for just about any kind of real estate deal you want to do. Using the leverage of private money will put you on the same level as investors having twice your experience, because you’ll have nearly limitless capital. Below you’ll find a few preliminary steps to get you ready to create your own private money for real estate investing empire.
Your first step to gaining access to all the private money you could ever need is to take stock of yourself. In other words, sit down and write out a brief business plan, outlining your method of operation. Answer the questions an investor would be likely to ask such as, what are your investing goals, and how do you plan to reach them? Be specific, and state what types of properties you will buy, whether you will hold them or sell them, what kind of discount you will be able to get, and what your profits look will like.
The time you spend on this step will pay handsome dividends down the road, because your business plan will become the outline of your elevator speech and your seminar presentation, both of which I’ll cover in detail in another article. Just be sure to be brief and to the point, and think like a potential investor as you work on your plan. Include specific results you have already seen in your investing endeavors, if you have any. If not, estimate, but be conservative in your estimates. Potential investors have seen too many pie-in-the-sky promises, and they can smell them a mile away.
The next step is to create your potential private lenders list by writing down the name of each and every person you know. You’ll make no judgments about worth or lending ability, just follow one simple rule- if you know them, their name goes on your list, whether you have known them for one day or thirty years. If a name pops into your head, write it down, and get help remembering who you know from friends and family. Work towards the most complete, extensive list possible.
A little extra time spent on this step will be well spent. After you have worked on your list of possible private money lenders, put the list aside for a while, even overnight. Come back to it the next day, and you’ll be amazed at how many more names you will have come up with. Don’t rush. Keep the list with you for a few days, and add names to it whenever they pop into your head.
When you feel you have a list with the names of everyone you know, add their contact information. Your goal here is to have at least one way to contact everybody on your list. You’re looking for telephone numbers, email addresses and street addresses. Make sure you have complete and up-to-date information, because once you start contacting these folks, you don’t want to get stalled because you can’t find their contact info. Again, no need to hurry. The time you spend in this phase lays the groundwork for your success later on.
OK, last step. Using your business plan as a template, write a letter to your list of possible lenders, telling them what you are doing, how you are doing it, and what you are looking for. Lay it all out for them, and be straightforward. Ask them to think about becoming one of your private lenders. Most important of all, tell them clearly why they should want to do it. In other words, what are the benefits? What’s in it for them?
Some might be scared of this step, but you won’t be! All the preparation you’ve done up til now will give you confidence to carry through to the finish line. Go for it, and write the best letter you possibly can, no matter how many re-writes it takes. this letter is going to be the cornerstone of the future work you do to build a stable of private money sources, eager to stuff cash in your pockets for real estate deals. In your letter, add at least five benefits for the lender to participate, and make them pop! Now that your letter is finished, you are prepared to move on to the next step of finding actual lenders for your private money lender loans program.
Leave a Reply