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.
Initially, you will start by sitting yourself down in a comfortable place and writing out your investment plan. No, I don’t mean you need to pound out thirty pages, but just a short, specific, on-point business plan that will let prospective lenders know you and your business. How do you plan to invest? What types of properties? Will you buy and hold or flip? How will you profit? What kinds of discounts will you realize? Think like a potential investor and answer their questions before they ask them.
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.
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!
Finally, write a letter. Yes I said a letter, but don’t panic. The hard work’s done. Just take your business plan and scale it down and personalize it. You’re going to write a letter explaining your investing to your list, and telling them exactly what you’re looking for. In other words, be upfront and specific. Tell them you invest in real estate, and what kind. Tell them you’re looking for private lenders. Most importantly tell them the benefits of loaning you money. In other words, tell them 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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