Obtaining funding is one of the biggest hurdles in real estate investing. Either you want to buy rental properties, or do fix and flip, knowing how and where to get the money fast is crucial. Furthermore, raising private money is the key to growing your real estate business fast or expanding to the next level.
I have done a lot of podcasts and interviews with investors who have hundreds of rental properties and they all agree on one thing: the connection with availability of private money was the key to where they are today with their investments.
But where do you even begin?
Three Steps to Financial Empowerment Through Private Money
Step 1: Build Your Private Lender List: The first step is not about money—it’s about people. Cultivate relationships with potential investors, emphasizing trust and shared values. Think about who you already know that might be interested in earning a return by funding your real estate deals. Your list may include friends, family members, colleagues, acquaintances and more. Cast a wide net here – you never know who may want to get involved.
Step 2: Create Your Private Lender Package: You’ll need an enticing package to present to prospects on your list. Include key details about you, your experience, examples of previous successful projects, the types of deals you’re working on now, projected returns, repayment terms, and any other relevant info. The more professional and polished your package, the better chance lenders will want to work with you.
Step 3: Educate and Empower: Share your private lender package with them, explain why real estate is a smart investment, and detail exactly how their money will be used. Be prepared to answer questions and handle objections. Stay persistent through the process – raising private money requires determination.
Types of Private Money Lenders: Your Winning Partners
- Institutional Private Lender: Think of them as the seasoned players in the financial game. These lenders are organizations that provide loans backed by real estate. While they may have stricter criteria, they offer stability and a formalized process.
- Money Partner: These are your potential allies in wealth creation. Money partners are individuals who invest directly in your real estate ventures. With a more flexible approach, they bring not just capital but a personal touch to your investment journey. Your relationship and their trust in you is most important.
Why Private Money is Your Real Estate Game-Changer
- Flexibility and Speed
- Tailored Terms
- Personal Connection
- Ability to scale your real estate business faster
- Low barriers to entry – your own cash or credit not required
- Ability to build a portfolio of properties using entirely other people’s money
Clearly, bringing on private lenders can be a total game changer for investing in real estate. If raising all the capital yourself seems overwhelming, don’t let it stop you. Tap into private money so you can start doing deals… without going broke.
The keys are being persistent, thinking outside the box, and remembering – you have so much to offer private lenders in return. With the right approach, you can secure the funding you need quicker than you ever realized possible.