Preparation – My Big Secret to Private Money Success

Would YOU invest money with YOU?

This is one of the most important questions you must answer in raising private money.

In fact, you should answer it even before you consider getting 1 dime from an outside investor.

Just as if you were going into a bank to get a loan for your business, you should treat private lenders the same way.

If you were going to get a bank loan (assuming they did such crazy things) would you:

• wear a suit?
• have a business plan?
• know your facts?
• be on time?
• have a rehearsed presentation?

My guess is the answer would be “Yes.”

If so, I’m not sure why it’s any different for real estate investors wanting to raise private money.

Each month I attend a local REIA meeting. To meet new investors, network with friends. Here I often meet with clients and students.

And, inevitably, I have people approach me about raising private money.

They want to know how to do it.

My first question is: “how much money do you want to raise? And for what type of projects?”

They are stumped with this simple question.

Zero preparation.

Spending zero time and not preparing for anything are sure ways to fall flat on your face. I think the reason real estate investors fall into this trap so easily is because our projects pay such great returns. After all, why would anyone simply fall all over themselves to throw money at us.

If only it were that easy.

Just because the profits and potential of good real estate investment deals are readily evident to us doesn’t mean these benefits are obvious to others. Especially those who don’t know a thing about real estate.

To be a true professional, to truly strike gold in raising private money, you must be prepared.

Think of yourself as a professional athlete. An Olympic competitor.

Would you approach the starting line without ever having done one hour of practice? Would you decide you were going to swim competitively and then simply show up to a swim meet and assume you would win?

Apply this same approach to your real estate investing business (read: business, not hobby). You should allocate the amount of time each week necessary to build a solid business. Funding is one part of the equation. For me, its the most important part.

I still spend several hours per week marketing for private investors. Setting up meetings. Planting seeds. Working on my marketing pieces. Looking for ways to improve them. I take my business and my profession very seriously.

You can do the same thing. Doesn’t matter if you are working full time and investing in your spare time or not. Just because you invest part time doesn’t mean you get to put in 1/2 the effort. Your potential investors are looking for weak links in the chain. Reasons to not place funds with you.

You must give them every reason to write the check. Remove objections before they arise. Be professional in everything.

And that is what preparation is: professionalism.

It gets results.

Try it.

-Happy Investing

Tags: Private Money Preparation, rasing capital for real estate