There has never been as effective a financing method for investment real estate deals as the one I will discuss in this article. Whether you are an experienced investor or a complete newbie, you need to take a few moments and read these few short paragraphs, because they will introduce you to a powerful and creative concept to fund almost any type of real estate transaction. Using this technique, you can gain an unfair advantage over more experienced investors, and gain access to nearly unlimited capital. Here are a few beginning steps to prepare you to build your very own real estate private lending group.
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.
You’ll need to take your time with this and not rush, because it will pay off for you later. This plan you are writing will become the foundation for two more components of the system- your elevator speech and your seminar presentation – which I will cover in a future article. Make certain you are not long winded, and you are specific, and keep your potential lender in mind as you work. It may even help for you to think of one specific person as you write, and write TO that person. Add details about deals you have already done if you have any. If not estimate, but do so conservatively.
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.
You don’t want or need to hurry this step. Slow down and get a good start on the list, then set it aside for a couple of days to let your subconscious go to work. When you pick it up again, you will be astonished at how many new names you’ve remembered. Lastly, keep the list with you constantly for a few days, and put any name you think of down immediately.
Once you have what you believe is a complete list, start adding contact data such as email, street address, and telephone #. The goal is to have at least one way to contact each individual on your list, and you want to make sure the data you have is good and current. Once you start getting in touch with these people, you won’t want to stop to get addresses and such. You’ll be too excited! A little extra time spent here sets you up for massive success later!
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?
Fear shouldn’t keep you from accomplishing this- and it won’t, because you’re prepared! Don’t rush through just to get it done. Instead, work hard to get the letter just right, no matter how many times you need to re-write it. Your letter will become the foundation of all your efforts to build a group of private lenders. Be sure to include as many lender benefits in your letter as you can think of… strive for five! Once your letter is done, you’ve completed this phase, and you are ready to start looking for private money lenders for your real estate deals.
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