Many of my students use my lending company, Freeland Lending, to fund their deals, but I really encourage them after they get a few successful flips under their belt to eliminate the middle man (ME) and save themselves some cash.
There are several important little pieces to the real estate investing puzzle that you need to put into place to have a proven, automated system. Having private lenders is a big one.
Whether you are a beginner who just invested in my program, or maybe you still on the fence about it, or you're a seasoned real estate investor - raising private money will be a key component to your business.
7 Simple Steps
1. Make a list, and check it twice.
You've already built a bigger network of friends and acquaintances than you might realize. Start brainstorming a list of all the people you already know. Compile your list in a spreadsheet, including as much contact information as you can - email addresses, street addresses, and phone numbers are gold. Get out there and network with these people every opportunity you can.
2. Stay connected.
Send them your case studies and newsletters every month but DO NOT ask them to fund your project from your mailer. The contact mailer is simply to put you at the top of their minds for potential investments without you asking them for money for a particular deal. Remember, your contact should be someone whom you have identified as having the financial resources and temperament to potentially loan you money. Keep in mind that you must have an existing, prior relationship with these people before you make them a private offer.
3. Get face-to-face.
Your newsletter should have a request to have a quick call to discuss getting together in person. You are not telling your contact that you want to get together to discuss loans or investment deals, but to discuss what you are doing as a real estate professional. The idea is to establish a relationship so you can prove (if this person is a new contact for you) that you have had a relationship with them for at least thirty days and have been in touch with them at least three times. This is an important element of proving a previous existing relationship.
4. At the right time, present your opportunity.
When you meet with a potential investor face-to-face and they ask what you do, answer their question this way, "I generate funds for real estate projects. I generate those funds from private investors. I buy portfolios of distressed properties and foreclosures and I offer the private investor a fixed, double digit interest rate."
Your approach with a private investor should always be to describe the prospective deal in terms of what it means to him, not what it means to you. Be sure to tell them about the wonderful benefits they will enjoy being your financial partner. For example, once you've proven yourself and paid off their loan as you have agreed, they will be much more inclined to lend you funds for a second, third, and fourth project. You should tell them that. Let them see the long term benefits they will enjoy by being your financial partner.
When your prospective private investor sees what you're doing, they may get excited about the opportunity to get involved. After you've established a provable prior relationship, it's time to show them various investment opportunities and options and tell them about potential investment prospects. There is really only one path in the investment choices presented, and that is to make sure they understand that other investment possibilities are not a good option and that being a financial partner with you is the best decision they could make.
5. Following up is critical.
When they ask for more information be sure to get their business card so you can send them your newsletter. Or simply ask for their phone number and call them. When you do, be sure to have them save your number so they can text you. The purpose of all this is to encourage their interest and get their phone number so you can text them. You may close the deal with them immediately, but you may also need to keep in front of them for a few months or even a year or more. Keep the long view in sight.
6. Build your team.
Your goal will be to find one private lender, one project and one contractor. If you do this, you can work with this team over and over again. It's best to have a proven team in place. Everyone learns how each other works and how best to work together as a team. The private lender is an essential part of your team.
7. Care for your private investors to ensure a perpetual payoff.
The private investor is worth a lot more than just the first deal and the first $40K. They are literally worth hundreds of thousands of dollars and profits when their financial resources are put to work. Make sure your private investor is getting a good percentage rate for their money. They should get at least 12% to 15% on average.
Learn From Donald Trump
Donald Trump prides himself on being self-made.
That’s why when he talks about building his multi-billion dollar empire, he downplays the fact he had help getting started.
“A small loan from my father.”
Well… when most people hear this story, the usual reaction is…
1) Damn, I wish I grew up where $1 million was considered a "small loan".
2) I bet I could build a fortune, too, if I had access to that kind of money!
And the truth is…
You’re probably right!
Because FUNDING is the single most important ingredient to building massive wealth through real estate.
Unless you have access to money - whether it's your own, private money or a bank loan, you can't close any deals. But I can show you how you can have the same advantaged start to your real estate career as Donald Trump had! No joke.
Because I’m going to show you how to immediately unlock ALL the funding you’ll ever need to close ALL of your juicy high-profit real estate deals. Just join me on this master class to learn more. There is no cost to attend, but we only have limited spots available, so register now!
See you there.
CEO Strategic Real Estate Coach
CEO Freeland Ventures and Freeland Lending
CEO Yellow Jacket Properties