Using the Internet to Get Private Money
By · CommentsThis is a subject I’ve wanted to tackle for quite a while…using the internet to get private money.
For today, I’m going to leave out the legal “nitty gritty” – as that could take up a few pages in itself. Instead, I’m going to focus on the practical aspects of it.
First, I need to get something off my chest: if you want to use the internet to attract prospective investors to your opportunity, please stop using the garbage industry slang “…X% secured by real estate…” as well as using the term “private lenders…”
If you’re doing this right now, whack yourself on the head with a rolled up newspaper. Bad dog. Ok, you probably want to know why you shouldn’t do this…you probably want to know why, considering there are a lot of companies who will build “custom private lender websites” and the like for a pretty penny.
It’s all about… Read More→
Any serious real estate investor that has read the Rich Dad books by Robert Kiyosaki, or many of the other quality educational materials available on real estate investing – has probably noticed a recurring theme:
Have a “Power Team” of professional advisors if you want to build a big, successful business.
Robert Kiyosaki often talks about how his Rich Dad would meet with his attorneys, accountants, insurance people, bankers and other essential business associates/service providers to help him prepare, plan and execute his vision of building wealth.
Since Rich Dad, Poor Dad came out in 2000, I’ve noticed an increasing trend of people of experts advocating that you have a your “team” put together. That is, in order to build a successful business, you should have on your speed dial:
- an attorney – a real estate attorney if you’re a real estate investors
- a corporate/contract attorney
- a bookkeeper (to keep your records straight)
- a CPA or tax attorney
- an insurance agent/broker (to help you identify and reduce risks)
- a banker
- a mentor or advisor
There are probably some others that I’m leaving off this short list.
One big question is: is it really necessary to have this power team to build a successful business?
“Pooling” private money gets a lot of buzz. Some of it is necessary, but some of it overkill.
If you listen to some “experts” enough, you’d probably come to the conclusion that you should never bring more than one private investor in on a particular deal.
In fact, if you listen to enough “experts” on enough subjects, you might not want to leave your house in the morning for fear that the sky would fall.
Thankfully, you’re not a henny-penny and you don’t think that the sky is falling.
With private money, pooling means bringing multiple private investors funds together, combining those funds and using them for a real estate transaction (actually, there’s probably a more lengthy legal description, but this is what it means in plain English).
So what’s the big deal? Read More→
Here’s a Quick Private Money-Getting Tip
By · CommentsHot off the presses…a conversation I had with a prospective private money investor yesterday. Because I thought this could be pretty instructional, I wrote everything down right after I hung up the phone.
Here’s the “meat and potatoes” of the conversation:
Prospective investor (PI): “I’m a bit worried about the stock market, it’s gone down a lot in the past few weeks and I’m thinking of taking some money off the table there.“
Me: “I hear you…it’s hard to understand what makes the market fluctuate so much, especially the extreme up and downs. Are you more focused on preservation of wealth now versus accumulating?”
PI: “You could say that. I’ve got enough to be comfortable on, but I’ve always focused on increasing my means. Your information says that you can get my money out for respectable returns. I think I’d like to give it a try, but I don’t know if I want to tie my money up for very long.”
Me: “Yes, we can definitely place your funds into a real estate investment that you’d be very comfortable with – something that would give you some stability in your portfolio. Now, as far as the time frame for investment, can you tell me what you have in mind?”
PI: Read More→
Seems pretty obvious to say: “people don’t know what they don’t know.” I think this is one of those statements that has eternal truth. When it comes to raising private money for real estate deals, I think it’s especially relevant.
It wasn’t that long ago (at least it seems like it wasn’t that long ago) when I started hitting the private money trail. At the time, I thought that anybody would be crazy to not sit down and consider investing in a private money deal. Then, I realized that I was crazy.
Why?
Because I was assuming that people knew what I knew. I was assuming, that the average investor that I was talking to had been to all the real estate seminars that I had, read all the books and been “up to speed” with what was possible in the marketplace.
Wrong. Wrong. Wrong.
This wrong-headed thinking cost me a lot of dough. It cost me a lot of blown appointments.
It’s just plain dumb to expect your private investors to know what you know. Often, they don’t even know much about investing – they have a financial planner or CPA or somebody that guides them. Therefore, it’s your job to first educate them. I advise providing educational materials before you even sit down with somebody the first time. This will save you a lot of frustration.
5 (Critically) Important Things… Read More→
Here’s a Good Starting Point to Get Private Investors
By · CommentsWhat’s the first thing to do when you decide private money will cure what ails ya?
Before you answer, here are a few popular choices:
- Run around like a crazy person and tell people that you’ve just discovered the second best thing to the lost city of gold
- Slap a business plan together and crunch numbers on a spreadsheet until you’re blue in the face
- Start posting ads on real estate message boards or online classifieds about your deal of the century
If I were you – I would not choose any of the above. Even though having a business plan is important to A: running and successful business and B: getting funding, I still wouldn’t rank it as numero uno on my to do list if I had to start all over again at zero with no private money.
Knowing what I know now about getting private lenders and equity investors to fund my real estate deals, the first and most important thing I would do is…. Read More→
How to Use Direct Mail for Raising Private Money
By · CommentsHave you ever used direct mail before?
You know; the type of marketing where you send a physical mailing to somebody’s home so that they can touch, feel and read a marketing message in their hands?
It seems as though everywhere I look and everything I read is all about “online, digital and social” marketing. Nary is anything written anymore about direct mail. Sure, there are some people here and there who use it for their real estate investing businesses – and kudos to them – but the digital advertising tidal wave has engulfed just about everybody in business.
And, if it’s engulfing you, you may be flushing hundreds of thousands of dollars in private money right down the toilet.
Here’s what I mean: Read More→
Predatory “Private Lenders?”
By · CommentsSometimes stuff just comes out of left field.
You don’t see it coming – but it blindsides you nonetheless.
When you’re first raising private money to fund your real estate deals, it’s pretty tempting to grab at anything when someone says they’re interested in placing funds with you.
After all, you’ve spent some time, paid some dues and…finally…someone says “yes” I’m ready to invest.
But, then some interesting facts come out of the woodwork…
This “investor” needs to close really fast. They can only invest money for a short period of time (like 6 months). And, they want 20% on their money – flat rate (not annualized).
You’re stuck between a rock and a hard place: should you work with this person or not?
Before I answer that question, let’s look at what your ideal target investor should be like: Read More→
Looking back on all the private money deals I’ve done, I can’t tell you how many times I thought that I would have a “one-call close.” You know, where the potential investor calls you just after they have first learned about you, they’re hot to invest money and a check goes in the mail right to your door.
I’m continually working for that “one-call close”…but it has thus far eluded me. I’m not happy about it, but, it’s something I’m striving for.
A few days ago I was talking with a client and this subject came up. This person was wondering why he wasn’t getting a flood of interested private investors ready to throw money at him from his website. Going into the conversation more, I realized that the gentleman I was talking to had a lot of the private money game figured out. For instance, he was:
- Getting his message in front of people
- Getting his message in front of the “right” people
- Offering a competitive product
- Giving prospective investors a very good reason to contact him (soon!)
Everything looked pretty good, until we started discussing how he was sequencing his marketing.
Aha!
We stumbled upon a very critical – yet often overlooked – aspect of attracting private investors: the right marketing sequence.
In any business, your goal should be to have prospects contact you that are pre-motivated, pre-disposed and pre-conditioned to do business with you. Therefore, with private money, you want to have prospective investors contact you when they are pre-motivated, pre-disposed and pre-conditioned to place funds.
No sweat, right?
Not so fast! Read More→
Should You Advertise in the Newspaper for Private Money?
By · CommentsNewspapers are old, stodgy and…still quite an expensive form of advertising.
But, people still read newspapers. And perhaps more importantly, those in your “target market” for private money are probably newspaper readers (at least the Sunday paper).
So…
Should you ever advertise for private money using the newspaper?
I think there are a few determining factors that you must consider before pulling the trigger on something like this.
- Your market
- Your marketing
- Securities laws
First let’s talk about your market. Read More→
