How to Get Private Lenders & Lines of Credit to Fund Your Business

What we are going through – right now – is an economic revolution where there is going to be the greatest redistribution of wealth that we’ve seen in the last 100 years.  The greed of banks have really made a mess of things.

While credit from banks have dried up, there’s a whole population of private money investors that are looking for opportunities to invest their money.  And even now—especially now, real estate can generate extraordinary returns for the real estate investor and their private lenders.

Why?  Because buyers with cash from private lenders can literally name their price.  This means getting deep discounts of only 20% to 40% of market value.  And a prices like those, investors can still sell at a discount to homeowners and still make hefty profits.

Wouldn’t it be tremendous, if you could get in on the secrets of borrowing private money?  I’m talking about friends, family, private money funds, and angel investors.

What’s In It For Me?

The first key ting you have to address is WIIFM (which is not a radio station) it is an acronym that stands for  “What’s In It For Me”.  That’s right- private individuals just like the banks are motivated by the greed factor.
So “What’s In It For Me” is really the question on which rests your private money borrowing success.

Since this is the first thing on a potential investor’s mind, wouldn’t it make sense to start the conversation by telling them?
How much you offer really rides on the kind of private lenders you are presenting to, and what expectations they bring to the table.  For friends and family – their expectations are based on CDs or the stock market.  So for friends and family consider offering a 10% or higher returns.
On the other hand, for private lenders of high net worth (like angel investors), they regularly look for investments with much higher returns.  To be at all interested, they would expect returns of 15% or higher.
Wouldn’t it be great, if you could borrow the money with no interest, no payments? 

Then consider offering instead of interest, an equity—a percent of the profits.  And if the private lender does want regular payments, you can use mixed funding.

Make the interest payment low enough to still get some cash flow from the property, and supplement the return to the investor by adding what’s called an “equity kicker “ i.e.,  offering a percent of the profit to the investor to increase his yield.

Real Estate investors who would like to learn more about working with private lenders and creating a financing plan can take advantage of a new resource I’ve created called the INVESTOR WEALTH NETWORK .  In it I give my personal tips tricks and techniques for funding your real estate deals, with particular emphasis on finding, preparing for, and presenting to private money lenders and other high net worth invdividuals and funds.

Posted to Angel Investors, Friends & Family, High Net Worth Lenders, Private Lending
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I saw an article in a recent issue of Forbes about guy who is buying foreclosed properties at the steps.  The article relates how he bought 2 properties worth $725K for $400K each using $120K in savings and $680K from a line of credit.  He sold the homes 6 weeks later for $689K each, and netted $485K from the total transaction. 

Not bad for 6 weeks work.  Now this guy had a credit score of 819, which allowed him to get preferential treatment from the bank offering the 680K mortgage.  The article didn’t say what his income was.  However, you can see what a really good credit score can do for you.   Now, most folks don’t have credit scores in that range.

Now, as big money goes, the $800K that this guy used, sounds like a lot, but it really isn’t.  Let’s suppose you really wanted to flip houses in bulk.  After all, most real estate investors know how to do this.  They just don’t have the money.

Well, suppose you found some private lenders, that you agreed to pay 15% for the use of their funds and that money would be paid back in 3-6 months.  That’s a pretty awesome return on their investment.  Furthermore, why buy properties on the steps?  It’s hot, sweaty, takes a lot of time, and your carrying around big cashiers checks you may or may not use.

Better, call the banks directly and ask for the REO department.  Now, if you want to buy a single house, they may not be interested.  However, if you want to buy say 10 per month, that will not only get their attention, you can probably get an even better discount.  In fact, a colleague of mine is doing exactly that, and picking up homes at 40 cents on the dollar.

Now suppose after all is said and done, he makes $100,000 per house and is selling them well below market.  That would net him $1 Million per month!  Great plan–yes?  If your buying 10 homes at $200K each, that’s $2Million per month of funding.  So all we need is the money.

Unless you’re fantastically wealthy this is not a game you’re going to be playing with your own resources.  You’ll want to be talking to high net worth individuals like angel investors, private fund managers, and financial planners with high net worth clients.  For some this would still be too small an investment.  And there are others that would be excited to participate in the opportunity.

Want to get stared.  There’s some groundwork and preparation you’ll need to establish yourself as a credible investment option to these sophisticated investors.  Doing so, is a pretty straightforward process.   

To get started I highly recommend you get your hands on my “Show Me the Money” training manual.  There are several chapters devoted to raising private money, including millions from high net worth individuals.  Just use this link or click on the icon on the right side of this page.

Do this right and the current foreclosure crisis will make you one the high net worth individuals your desiring to borrow from right now.

Posted to Angel Investors, Business Lines of Credit, High Net Worth Lenders, Multiple Funding Strategy, Private Lending
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I my experience, most investors feel about business plans the way many people feel about exercise.  They know it’s really good for them, but they just can’t find the time to get around to it.  Other things always seem to come up. 

Now, you probably know the saying (and the truth) that “if you fail to plan, you plan to fail.”  I know I’m preaching to the chior, but let me give you some other reasons why a business plan can boost your success in obtaining large sums of money from private lenders:

1. Having a well-thought out business plan, is a powerful and positive marketing document for sophisticated and wealthy private lenders and angel investors. 

2. Your business plan will enormously boost your credibility with private lenders (even friends and family)

Let me explain. 

Most most investors get into real estate, strongly motivated to be working for themselves and achieving financial freedom.  And my guess is that even if you have a company (and you should), it’s really a one-man (or one woman) show.  Sure, you may use an attorney to close, but it’s pretty much you. 

That may be great for you, but scares the heck out of private investors.  Why? because they are used to evaluating Companies, as investment prospects.  A company is an entity that is not dependent on one individual.  If the individual gets sick or goes on vacation, the company’s business continues, and doesn’t put the investment at risk.  Having a business plan that shows you have or are building a strong organization that knows where it’s going is a major factor in addressing that concern.

In fact, all of the sophisticated and wealthy private investors that I know, expect to see a business plan to evaluate an investment. 

As a marketing tool, a business plan will help you create your story that will attract the interest of private lenders.  In fact, having a “good story” is absolutely essential if you want to be successful in raising private money.

I know that sitting down to write a business plan is a daunting prospect.  Would having a template to follow, and even being able to get a plan written for you be of interest?  If so, you are invited to join our inner circle where we have a whole training session on just this topic.

Posted to Angel Investors, High Net Worth Lenders, Million Dollar Slush Fund, Private Lending, SEC, Uncategorized
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So with all the negative media about real estate, how do you convince a potential private lender, that his or her money is safe being invested with you?

First, the “good news” is that people don’t have any good alternatives for investing their money right now.  The stock market is very volatile, and has been performing poorly for quite a while.  Start up companies are as risky as they’ve ever been.

In fact, it is really a good time to buy real estate because prices are depressed and sellers are motivated.  However, how do you convince your potential investors that their money is safe with you and things won’t get worse.

Here’s something to consider: What if you could show your investor that you had an objective means of evaluating properties such that you could show them, that even if things got worse, they’d still make a profit?

That would certainly set you apart from the crowd, and make your appeal more convincing.  Fortunately, there is such a tool, that I’ve created and that we use in all of our real estate deals.  It’s called the Deal Evaluation Tool.  It’s basically an expert system that analysis the financial returns and quantifies the financial risk of any kind of real estate transaction, with any kind of terms.

I personally think that no investor “should leave home without it”.  With proper due diligence, and this expert system, you being doing killer deals in any kind of market, every time.  Check it out yourself by using this link.

Posted to Angel Investors, Friends & Family, High Net Worth Lenders, Marketing in Real Estate, Private Lending
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Real estate is a great investment, right? And a lot of investors I know are making a killing.  So, why all the negative press?  The answer is very important to you, because your potential private lenders are reading and watching this very same media, and thinking it’s a smart move Not to invest in real estate.

Well, first of all, the press is partially right–real estate values are falling in many (but not all) parts of the country.  And people with ARM mortgages are getting foreclosed on right and left!  In 2007, Atlanta had over 70,000 foreclosures!  And, of course, this whole crisis was brought on by greed.  Greed of the banks and mortgage brokers that qualified people for mortgages they couldn’t possibly afford once the rates re-adjusted. 

And now, in a move that gives hipocracy a whole new meaning, the banks are tut-tutting over the “shock” and tightening credit so it’s even harder for legitimate borrowers to buy property.  This is really bad news for many sellers, because with fewer buyers and more foreclosures, prices are being driven south.

And this is what the public and your potential private lenders hear about.  However, the other side of the story.  It’s a great buyer’s market where you can pick up property at huge discounts.  And this has to be the core of the story you tell your private lenders. 

Now, you also need to provide a story about how you’re going to protect their money from all the negative news and other things that might happen.  So, when you tell them you can get property at a deep discount, let’s be clear about what price is a “discount”.  First, a discount does not mean, a price lower than it used to be a year ago.  A discount means a price very much lower than the current market value.  In other words, a price below what the house would sell instantly by any qualified buyer where you would still make a hefty profit after paying off your loans and your investors.  This is what I call, “making your money when you buy!”

In other words, your acquiring property for an amount that even if things didn’t go as planned you’d still come out ahead.  If you don’t know how to figure that, you really should own my Deal Evaluation Tool.  It’s an expert system that will perform the “what if” calculations for you and give you a thumbs up or a thumbs down on any real estate purchase.  I wouldn’t consider any property without it!

Posted to Angel Investors, Friends & Family, High Net Worth Lenders, Private Lending
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There are 2 key things you must remember when dealing with private lenders:

1) Never come from “needing the money”–always present as investment opportunity

2) Be ever patient and never give up.

You will have the experience of a person telling you they’d love to invest, but when it comes to actually writing the check… well, something always seems to come up, and you find yourself talking more and more to the voicemail.

“Why this is?” as my 2 yr old granddaughter would say.  Well, there is still some lingering doubt about committing the money.  Or, now is just not the right time for the individual.

Here’s how patience wins:

1) lingering doubt - the more you communicate–voicemail and email, you start becoming familiar.  (Why would he still be asking me, if it wasn’t a good investment).

2) right time - you’ll be there when time becomes right.  That could be tomorrow or a year from now.  If you’re no longer communicating you’ll miss out.

Bottomline - hang in there.  The first one’s the hardest.

By the way, my comprehensive funding manual called “Show Me the Money” has step by step instructions for raising money from private lenders, high net worth individuals, lines of credit, financial institutions, buyers, sellers, notes, and much, much more.   And, it’s a ridiculously low investment (for now!).  Click here and Get in NOW.

Posted to Angel Investors, Friends & Family, High Net Worth Lenders, Million Dollar Slush Fund, Private Lending
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