Finding money for your next deal is not nearly as difficult as it once was. With the increased popularity in real estate, you probably already know a handful of people who are interested in investing. All you need to do is put your best foot forward and reach out to them. Tapping into this resources and using other people’s money is one of the quickest ways to grow your business. Instead of missing out on leads because of a lack of funding, private money will help you close more deals. Not only will you close more deals, however, but they will come to fruition much quicker. The money you need to give your business a jump start is all around you.
The first thing you should do is let everyone around you know what it is you do for a living. Do your friends and family know that you are a real estate investor? It doesn’t matter if you close a deal a week, or one every six months. The people closest to you are often the best sources of money. Start by sending friends, family and co-workers an introductory email announcing your arrival to the business. From there, you can easily set up an investing page on social media and reach people you may not have had an email for. Real estate is largely about the number of contacts you have and how well you use them. You never know if an old co-worker knows someone who has funds they have been itching to park in the real estate market. You will never know unless you put yourself out there.
It is very difficult to ask people for money if you don’t know what you are doing. You don’t need to be an expert in every area of the business, but you need to have a clear vision for what you want to do. Regardless of who it is you are asking, there will be questions. How are you going to find deals? What are the expected returns? How quickly can I get my money turned around? What is my work expectation? There are just a few of the questions that will come your way. To find the funds you are looking for, you need to be ready to answer these questions, and many more. This means knowing your local market and being as prepared as possible. There should be no confusion as far as the terms of any proposed deal and what you will bring to the table. Declaring that you want to invest in real estate is not enough. If you don’t bring anything to the table, there are other options for someone to work with. The more defined you are in what you want to do, the more likely you will find people to work.
Every meeting you take with a potential private money investor is a chance to build a reputation. It can be frustrating at times, getting nothing from all of your meetings that is. While you may not think that your cousin is a serious investing candidate, you need to treat them as such. With the growth of social media and how easy it is to connect with people word of mouth travels faster than ever. You never really know who someone knows or how much money they have behind them. It is not uncommon to have half a dozen meetings without getting anywhere, but hit the jackpot on the seventh try. Even if you don’t get a commitment from the meeting, you may build a positive reputation. Your cousin in law may rave about how prepared and professional you were, and tell a co-worker who has been looking to invest for years. Every meeting you take should be treated like the most important one you will ever have.
People work with people they feel they can trust. One of the ways to build trust is by talking in terms anyone can understand. There is plenty of jargon and real estate specific terms in the investing world. To get people to work with you, there is a fine line you need to walk between sounding educated and not talking down to a potential partner. The best way to do this is to eliminate the jargon and explain every step of the process in terms anyone can understand. Using fancy real estate terms may make you sound smart, but you aren’t making the listener very comfortable. There are ways to explain the process without sounding like a professor. The more comfortable you make the listener feel, the more likely they will trust you enough to work with you.
Finding the money you need to close deals will transform your business. This will certainly not happen overnight. You need to network yourself to friends, family and everyone in your contact base. Once you find someone, your work is not over. You should always have a handful of private money lenders that you can reach out to. If one doesn’t like the deal, another one might. Finding private money partners is easier than it has been, but it doesn’t mean that people will just fall into your lap. However, following these steps will make the search that much easier.