Learn How To Start Investing In Real Estate
Learn How To Start Investing In Real Estate

3 Real Estate Investor Financing Tenets To Abide By

Written by Than Merrill

Key Takeaways

  • Securing real estate investor financing has as much to do with your mindset as it does with your actual strategy.
  • Today’s most prolific investors are well aware that securing funding is only hard if you make it difficult for yourself by neglecting your most important asset: your own mindset.
  • Anyone can secure funding for their next deal — so long as they have the right attitude moving forward.

Securing real estate investor financing isn’t the monumental obstacle far too many new investors make it out to be, but rather a manageable task that can be carried out by anyone that puts their mind to it. You see, as trite as it may sound, you really can accomplish anything if you want to badly enough, and landing capital is no exception. Sure, you could easily argue that strategy plays a big role in securing real estate investor financing, but even the greatest approach is rendered moot in the face of an investor void of the right mindset. If for nothing else, it’s your own mindset that will serve as the foundation on which you will be able to formulate not only a strategy, but one that’s habitually effective.

Without the mental capacity to secure funding, how can you possibly hope to land the capital for your next deal? You can’t. You must first demonstrate that you have the mental bandwidth of trying to receive funding before you, well, go out and try to get money from someone.

Today’s most prolific investors know it, and it’s time you did, too: securing real estate investor financing is only possible for those that have the mental wherewithal to do so. Fortunately, said wherewithal isn’t hereditary; you aren’t born with it, but rather learn it. In fact, understanding how to find money for your next deal is as simple as following a few tried and true rules — tenets, if you will.

With that in mind, here are the real estate investor financing tenants I have lived by for the better part of my career; they have helped me secure countless funding opportunities, and there’s no reason they couldn’t do the same for you. The ability to securing funding, after all, is nothing if not a particular mindset, and these tenets should help you develop the mindset necessary to get the money you need.

A Look Inside The Real Estate Investor Financing Mindset

Financing real estate investments

Real estate investor financing is the “lifeblood” of today’s entrepreneurial community. After all, you can’t buy an asset without the proper funds. However, it’s now more important than ever to have the right mindset when trying to do so. It’s no longer enough to simply have a strategy; you need to complement it with the right mindset. The following examples are a great place to start.

1. Lenders want to work with you just as much as you want to work with them.

For one reason or another, new investors face a stigmatism that is hardly justified; they are scared of both hard and private money lenders. Most likely, their fear stems from their dependance on said lenders, but as I already said, it’s unwarranted. Lenders aren’t to be feared, but rather viewed as equals. If for nothing else, they need investors as much as investors need them — it’s a two-way street. The sooner you realize you are on an equal playing field, the sooner you can actually start formulating a strategy that helps everyone involved. And what is a great strategy, if not for one that benefits every party?

Therein lies the key to receiving real estate investor financing: understanding the symbiotic nature of borrowers and lenders. Sure, they are helping you immensely, but — even more importantly — is how you can help them. Instead of simply asking for money, you need to fill prospective investors in on why investing in your next project is a smart move. In fact, you should have an entire system dedicated impressing lenders with your quality of work and efficiency.

Again, receiving capital to fund your next deal has as much to do with your mindset as it does with your systems. That said, you are more likely to land money if you can get over the idea that lenders are — for lack of a better word — scary. They aren’t. It’s as simple as that. While they are incredibly important to today’s investors, there’s no reason to be timid. If you can present lenders with enough evidence to invest in you, there’s no reason to be anything but excited to work with them.

2. Failure isn’t a roadblock, but rather an invaluable learning mechanism.

I want to make it abundantly clear; failure is — in no way whatsoever — the end of the road. It is of the utmost importance for investors to understand one thing when it comes to landing the money for their next deal: everybody will fail once. Simply put, there isn’t an investor out there that hasn’t been turned down to receive capital, myself included. That said, it’s how you react to said failure that will make or break your chances of landing money in the future. You can either take your lumps and turn tail, or you can learn from your mistakes. If you prefer the latter, congratulations, you are one step closer to exhibiting the mindset that is necessary to obtain the necessary capital for your next deal.

In my professional opinion, failure is the single greatest opportunity to expand your knowledge in a given area, and real estate investor financing is certainly no exception to the rule. Instead of sulking in failures, learn from them. Why was it that an investor turned down your request for capital? Was it a lack of experience? Was it your presentation?

Identify what it was that turned the last investor off, and improve upon it. You may find that the only difference between receiving money and being denied is a short, one-minute elevator pitch. If you can take what you learn from your failures and improve upon them, there’s no stopping you. The sooner you realize that, the sooner lenders will start welcoming you in with open arms.

The next time you come up short, take some time to reflect on where you went wrong and take note of it. Furthermore, look into how you may improve in said area. Doing so will not only sure up any holes in your game, but it’ll make you a much more competent investor.

3. Fortune favors the proactive, not those who are simply reactive.

It’s true: private and hard money lenders want to work with savvy investors. However, it’s not safe to assume the lenders will come looking for you. That’s not to say they won’t, but investors simply can’t sit idly by and expect good things to come their way. At the very least, fortune will favor those that are proactive — not reactive. So, as an investor, it’s in your best interest to exercise a proactive mindset. Instead of hoping a private money lender will knock on your door tomorrow, go out and find one. There’s no doubt in my mind that the best investors at gaining access to capital are those that take their destiny into their own hands — they don’t leave their future up to luck, but rather let hard work and determination do the talking for them.

Consequently, if you aren’t proactive, you are inherently reactive. That means each step you take will be in reaction to something else, or — worse — that you’ll always be one step behind. And I can assure you that few things are worse for today’s investors than being one step behind on receiving funding. To give yourself the best odds at gaining access to capital, take matters into your own hands and do whatever it takes to stay ahead of the competition.

It’s All In Your Head

Im not going to sit here and tell you there isn’t any strategy involved in securing real estate investor financing — there is a great deal of it. It’s worth noting, however, that even the best strategies won’t come to fruition if investors don’t exercise the right mindset. You see, it’s the mindset that makes the strategy possible — the foundation, if you will. Without the proper train of thought, the strategy will crumble. That said, be sure to exercise the tenets I hit on above if you hope to gain funding for your next deal. You may find that gaining access to real estate investor financing is as simple as a shift in the way you currently look at things.

Do you have any tenets you’d like to share with us? Let us know what has worked for you in the past in the comments below.