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.

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WIIFM

This acronym stands for “What’s in it for ME”.   And if you want to interest anybody in your project, it is the first question in their mind that you have to answer.  It’s not about your deal, or how much you know.  It’s about them and what they want.

Remember Dale Carnegie’s famous book “How to Win Friends and Influence People”.  It was published in the 1930’s and is as true today as it was then–because it talks about a fundamental truth of human nature!  After all, what you are looking to do with a private lending prospect is to:

1. “win friends” - that is build their trust

2. “influence them” to invest in your project.

Well, it is part of human nature to ask “What’s in it for ME”.  Even altruists, and saints ask that question same as a business person or a wealthy person.  The only difference might be what they consider a good reward to be.

So, in order to communicate with anyone, you have to first get their attention, and keep their interest.  And the  best and simplest way to do that when you want their money, is to tell them what their going to potentially get if you listen to you.

You could start off a conversation by saying something like, “Joe, Do you have an IRA or other investment capital, that’s not earning 15% and secured by real estate?”  Of course you will modify this depending what return your planning to give, and what security (if any) there is for the investment.   Or you could try: “Pam, would you be interested in earning 15% on an investment secured by real estate?”

Now, if the person says no–end of conversation.  However it’s been my experience that most people will at least want to hear you out.  And, of course, it’s much easier talking about your deal to someone who is already interested, than someone who’s resisting or bored.

Now, a lot of students ask me “how much should I offer a private lender”.   Well, the only true answer is that depends.  The key is to know what kind of return the person is normally getting from their investments, and what would be a significant improvement over that. 

For example, with friends and family who I would generally classify as unsophisticated investors, their investment experience consists of savings, CD’s, stocks and mutual funds.  Savings and Cd’s don’t even keep up with inflation.  The stock market has been rather pathetic over the last ten years producing a measly 2.5% annual return.  So for these private money prospects, a 10-15% return should sound pretty good.

For more sophisticated investors and high net worth individuals, a higher rate of return is expected since they have many more investment options. 

However, there is one more key consideration:  How much can your deal or project afford to pay an investor.  If you are offering regular interest payments is the cashflow sufficient so that you can pay your investors, even in the worse case scenario.  The answer had better be yes.  More on that next time.

By the way, if you want to learn everything you need to know for private lending success, I’ve created the absolute best and most comprehensive funding manual you will ever see called “Show Me the Money“.  It contains step by step instructions on how to get 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 Friends & Family, Private Lending, Uncategorized
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I’ve gotten a number of comments about my “Show Me the Money” Manual.  And I wanted to take the opportunity here to respond to them.

First of all, this manual is not just for experienced investors.  In fact, most of the techniques I teach in the manual work great even if you are a rank beginner.  For example, buyer and seller financing, private lending with family and friends, unsecured business lines of credit, equity exchange… In fact the only areas where a beginner will have a significant learning curve is with commercial loans, and million dollar funding.

Secondly, don’t let the low price decieve you.  This is not just a teaser, that requires you to buy something else, in order to do anything worthwhile.  Anybody, can follow the procedures I describe and be successful in having funds for real estate purchases.

So, if you want to own this one-of-a-kind deal funding manual, click on the “Show Me the Money” icon on this page or Use This Link Now.

For beginners with good credit I recommend you Immediately read the chapter on getting unsecured business lines of credit, and take action.  You could have access to hundreds of thousands of dollars in a matter of months.

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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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Even if you’re just starting out in real estate investing, building a group of private lenders and other funding sources for your real estate deals is absolutely critical to your success. 

Oh, yeah, I know all about getting “free” houses from owners that will give up their house “subject-to” the current mortgages or are willing to owner finance the sale.  However, beware because acquiring these properties is usually Not Cost Free!

There are holding costs (the mortgage, utilities, maintenance, etc.) until you get tenant or a buyer.  There may be some repairs, back payments, etc. that you’ll need to deal with.  In any case - promise yourself that the money is not going to come out of your pocket!

So, it’s time to start building your property funding program.  There are 10 basic ways to do this.  I’m only going to talk about one (the rest you can get in my”Show Me the Money” training manual at www.privatelendingguide.com).

Let’s talk about one important way: Private Lenders.  These are individuals with IRA money or significant investment capital who are willing to lend you thousands of dollars for a great rate of return and some assurance they’re going to be paid back. 

The easiest place to start is with your own family and your friends.  Next post, I’ll talk about how even beginners can raise hundreds of thousands in capital!

Posted to Friends & Family, Private Lending
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Anybody that’s been awake for the past 8 months knows that the public perception of the real estate market has taken a dive.  Now, it’s true that single family home prices in many parts of the country have leveled off or declined in value.  However, this is just part of the real estate market cycle. 

In fact, if you believe that to make money, you should “buy low” and “sell high”, now is definitely the time to buy.  The public of course believes just the opposite.  They’re holding their money in savings accounts or CD’s or worse, believing their stock broker or financial advisor can figure how to make money in a chaotic and unproductive stock market.

The challenge for the real estate investor is to show people with IRA’s and other investment capital the real estate right now is really the ideal investment.  To do so, you have to be prepared to address their fears and concern about losing money.  If you are flipping or rehabing and selling, you have to make convincing arguments about why you can sell for a profit while their is a glut of homes on the market and others are losing their shirts.

Prepare yourself with the facts of your market, and listen to the concerns of your potential investors.   Put yourself in the position of offering a sound financial alternative to their current investment situation.

By the way, if you want to know how to fund every deal you do, I’ve created the absolute best and most comprehensive funding manual you will ever see called “Show Me the Money“.  It contains step by step instructions on how to get 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 Friends & Family, High Net Worth Lenders, Million Dollar Slush Fund, 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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Wouldn’t it be great to have individuals you could call at a moment’s notice and borrow $100,000 or more!  Many successful investors are enjoying this situation.  What’s their secret?  Basically, it’s simple–just give these people what they want.

So, put yourself in their shoes, and think about how they would respond to you.  Here’s a key pointer to keep in mind: WIIFM - no, it’s not a radio station.  It’s an acronym that stands for:

“What’s In It For Me?”

So, when you talk to these people, before you describe your deal or how great you are, tell them what they’re going to get.  “Hey, John, how would you like to get a 10% rate of return on your money, no matter what happens in the stock market…”

Now, you got their attention!

By the way, if you want to know how to fund every deal you do, I’ve created the absolute best and most comprehensive funding manual you will ever see called “Show Me the Money“.  It contains step by step instructions on how to get 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 Friends & Family, Private Lending
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