Do you want to invest in real estate but aren’t quiet sure if you have the money to do so? Here are a few easy steps of where to start your journey in raising private money.
Many people, like you, want to invest in income producing property but don’t know how to go about the process. One of the even bigger issues is they don’t have the money needed to buy these properties and begin to invest in them. This is where private money comes in.
Dealing with loans from the bank and the long process it takes to get approved can be a long and irritating process. With private money you don’t have to endure these difficulties. Private money is money received from someone else you may know and have a relationship with or someone you just met. The benefits of private money is you can get it fast, your credit isn’t a factor, and you have a lot more flexibility with private money than you would with a loan from the bank.
You may think it is hard to raise private money and don’t know where to start. That is where we are going to help you. Here are some steps you need to better understand where to begin the process of raising private money.
First, you have to have a plan on how you will invest the investors’ money. You need to be able to show your investor that you know what you are doing by having a detailed plan on how the investor will get paid back and showing a track record.
Don’t have a track record? No problem – partner with someone who has the experience your investor is looking for.
Your goal is to make the investor comfortable and confident in making a deal with you and having an example of a prior deal to show them is a great place to start.
Second, you need to think about how you can help your contacts in your database. With bank interest rates on savings and CD’s so low and the cost of inflation eating into the purchasing power of investable funds, many people including your contacts are looking for alternative investment opportunities that will produce a high return.
Your contacts could be a family member, friend, business partner, or even someone who is just an acquaintance. You never know who may be a candidate for private money investing. You might even be surprised at who will.
Approaching someone about raising private money can seem like a scary thing to do. We are going to help you know just what to say to your potential private money investor.
1. If this person is someone close to you or not you should always begin by confidently discussing your plan with them. In your plan you should include your goals as well as your timeline of how you plan to spend and repay the investors’ money. Make sure to build a relationship with this person and make them feel comfortable around you.
2. Explain to them what private money is. This may not be something they have done before so you want them to have a clear understanding of the process and how it works. Remember there needs to be regular communication in a comfortable way while building a relationship with this person.
3. Tell them how they will benefit from the deal and what will they get out of the deal like cash flow, profit and investment return.
4. Assure them that you will pay them back on time by referring back to your plan you discussed with them previously. Get documents signed and file mortgage paperwork at courthouse if needed so the investors’ interest is protected.
5. If you have worked with private investors before, tell your potential investor about this experience and how beneficial and rewarding it was. Testimonials and referrals from other investors help with social proof that you are the real deal when it comes to real estate investing.
Finally, there is a high likelihood that when you first start talking about private money to your contacts that you will get some NO’s and NOT INTERESTED.
That is okay as it is part of the process. There are many people who don’t know that this “world” of private money investing exists. Your job is to educate and inform them about the benefits of private money and stay in contact with them.
You never know when people’s situations will change so you need to periodically follow-up with them and keep them updated of your progress, deals and opportunities.
Once you are able to tap into this powerful way to secure funds with private money, you will now be on your way to owning income producing property faster than ever before.