FUND THE DEAL
Let me start this section by borrowing a quote from Harvey Mackay,
"Dig your well before you're thirsty."
Even though Funding the Deal is Step 4, you should be start this at the beginning of the real estate investing lifecycle.
By this point in the deal timeline, if you are scrambling to find funding during the closing process, you are either going to be A.) Really stressed, or B.) Unable to perform on the contract and in danger of losing your earnest money. So start this step early and NEVER stop building your private lender list.
You might have noticed that I say private lender or private money. That's because it's THE BEST type of funding available for real estate investors.
Sure, there is hard money and traditional financing, but both of those involve going through a long, and sometimes tedious, vetting process.
Private lenders typically lend based on the relationship that they have with the person, rather than based on their credit score or other financial attributes. I have never heard of a private lender asking for a credit report or 6 months of bank statements hand stamped/signed by a teller.
We'll talk more about that in the Talking To Private Lenders section below, but first let's talk about finding private lenders.
FINDING PRIVATE LENDERS
The other way to find private lenders is through good old-fashioned networking. This is getting together with a person in a group setting or one-on-one to simply tell them more about what you do in an attempt to get a soft commitment to lend to you on a deal.
When I was on the hunt for Private Lenders, I put together, and used, The Project 100 exercise.
The Project 100 is an exercise designed to help you find the people directly in your life or indirectly that might be in a position to lend to you on a deal. It also goes through the psychology of finding private lenders and how you should be thinking about approaching it. You can get a copy above.
CREDIBILITY KIT
When you are preparing to meet with a private lender, you are going to want to put together a credibility kit to share with them. You want to share this with them prior to the meeting, but if it doesn't work out that way, at the meeting is ok.
I say to share it prior to the meeting (remove the comma here) because I don't want you sitting there the whole time going through the packet line-by-line.
The Credibility Kit is designed to give potential Private Lenders something tangible that helps demonstrate that you are a serious real estate investor with a legitimate business.
You can download it above and customize it to your business or use materials you already have in place.
TALKING TO PRIVATE LENDERS
Now that you have a list of private lenders you want to sit down with and a credibility kit put together, it's time for the actual meeting.
Remember, most private lenders agree to lend based solely on the relationship that they have with you. This means that your character and your confidence have to shine.
A common misconception among new investors is that they need to have experience to get someone to lend to them. I've found it to be the opposite. I know plenty of investors who have landed a LOT of private money without ever having done a deal.
If you go into a meeting confident, with a well thought out system for what you are going to do and you build a relationship where they can see your character and work ethic, then they will likely lend to you.
That's what the Positive Results Conversation above is all about. It's a conversation you can have with a potential private lender over a meal. A script you can work off of that covers everything you should be saying during the meeting and it even explains some of the psychology behind it.
DISCLAIMER
These documents and information contained herein are designed to provide accurate and authoritative information with regard to the subject matter being covered. It is given with the understanding that the authors and distributors are not engaged in providing legal, accounting, real estate or other professional advice.
If legal advice or other expert or professional assistance is required, the services of a competent professional person licensed in your area should be sought.
