- 4 Unexpected Things I’ve Learned From Buying My First Mobile Home Park
- How Ironic: America’s Rent-Controlled Cities Are Its Least Affordable
- U.S. homes are still a bargain on the international market
- Getting The Best Possible Quality Photos On MLSs and Syndicated Sites
- Home buyers in these markets have the upper hand
How To Approach Private Money Meetings
Having access to capital can open many doors in the real estate investing business. Many new investors are intimidated at the thought of sitting down with a private money group and asking them for money. As a result, they will delay or postpone meetings, causing their business to suffer the consequences. However, there is no reason to fear such a meeting. Private money lenders want to work with you just as bad as you want to work with them. The initial meeting may be difficult, but there are things you can say, or do, that will give you a huge advantage. With the right moves, you will be able to secure the appropriate funding to make everyone money.
The most important thing you can do whenever you meet any potential contact is to be prepared. While obvious, you need to spend the time to think about every possible way the conversation may go. Hard money and private money lenders are focused on returns, but they also want to get a feel for who they are working with. In many cases, how you present yourself is just as important as what you will do with their money. The biggest cause for hesitation in asking for money is a lack of experience. Fortunately, a small track-record can be offset by a good personality and solid preparation. Showing up with a halfhearted plan will probably not get the job done.
Even if you have never worked with a private money lender before, you should put yourself in their shoes and think about their potential risks. Anyone lending money, whether it is a bank or a private money lender, is worrying about repayment and return. Before you start talking about specific deals, you need to get your personal finances in order. Debt-to-income ratios and the ability to show your income isn’t nearly as big a deal to private money lenders, but they still need reassurances that you can pay their note in the event the rehab takes longer than expected or other issues come up. As you are preparing for the meeting, get any and all financial and current portfolio information ready. The more you have, the better you look.
Financials aside, private money lenders want to know how and when they will get their money back. If you have a track record, you can cite specific examples, but even if you don’t you can illustrate how you would operate if you did have access to money. The more specific and detailed you are, the better chance you have at getting money. It is a good idea to run your plans by a fellow investor or someone in the business that you trust. Try to find as many holes in your plan as possible and be prepared to address them. There are many ways to find deals and handle rehab projects. If you are confident in your method, you need to convey it. If you are questioned at your meeting and easily change your mind, you come across as someone who would wilt under pressure.
It is a good idea to bring a few potential deals to the meeting and discuss how you would work them and what you would use the money for. You will probably be asked how you plan on getting deals and what your methods of lead generation are. This is not a time to be coy and keep any realtor or other network contacts to yourself. Your private money lender has to be an ally. The more they trust you, the more freedom you will have to act quickly and get more deals. If you can bring a deal to the meeting that you can close and turnaround in 30 days, you will gain immediate credibility, and most likely a blank check for future business.
While private money meetings are a serious matter, there are ways to make them more personal. After all, real estate is a people business. You need to find opportunities to break the mood and show a sense of humor. Feel out the respective lender and establish a working relationship. If they can leave the meeting feeling that they know you and what you are about, they will feel they can trust you. If they can trust you, they will most likely lend their money to you. It is OK to break the ice and talk about your family, what sports teams you like or any other current news item. You should know which areas to stay away from, particularly controversial issues, but you do need to…
100% Secure
You must be logged in to post a comment Login