How to Approach Potential Private Money Lenders

August 25, 2021 melissa Real Estate Comments Off on How to Approach Potential Private Money Lenders

How to Approach Potential Private Money Lenders

Now that you already know how to find potential private money lenders, the next step is knowing how to approach them.

This part may be easier for seasoned real estate investors with vast experience in private money lending since they have already established a reputation and have proven themselves to be reliable investing partners. However, for rookie real estate investors, or those who have never ventured into the area of private money lending before, it can be a daunting experience!

Take a cue from Hillary and Marco on why you should not be afraid to ask the big questions.

The points below are from the twelfth episode of the Real Estate JAM, where Hillary and Marco Romero talk about utilizing private money to acquire properties for your real estate portfolio. They share some super helpful tips on finding and approaching private money lenders, structuring your deals and negotiations, taking care of your investors, and building solid confidence in the process. If you’re interested, you can listen to it on YouTube, Spotify, or Apple Podcasts.


 

The Right Mindset

Many times, as investors, we are terrified by the idea of asking others for money. However, the fact is that it’s a partnership. While you do get money from them, they get something from you too.

You should never approach your potential lenders with the mindset that you are begging them for money. You’re not soliciting donations. You’re presenting them with the opportunity to lend their cash, earn a good return, and get their money back when the property sells. Talk about a good deal, right?

Some of these potential money lenders have money that they are not putting to work, and we can show them the great opportunity they are missing.

It helps to be in the right mindset before approaching a potential lender. Remind yourself that they’re not superior to you, and you’re not inferior to them because they have money. As Hillary Romero describes it, “It’s like a beautiful marriage in a sense that both sides need each other.”.

 

Making Contact 

Once you’re in the right mindset, you can start contacting the people on your list. Either through a call or an email or by approaching them personally. This is when your self-confidence comes into play. You have to project certainty in the way you speak and present your proposal. You need to talk to them and explain to them your goals (what you’re trying to achieve) and strategies (how you’re trying to do them).

As Marco noted, “What you’re ultimately trying to do is ask if they want to join you on this journey that you plan on going on.”

In addition to the whats and hows, you also need to reassure them on why they should trust you. Get their interest straight away by saying something you strongly believe in. Capitalize on your integrity, expertise, and as well as your reputation. Understand that people are generally cautious when it comes to their money. So, you need to make sure that you know what you’re talking about and have a clear direction.

The important thing here is to build trust and connection. Whether the potential lender agrees to your proposal or not, treat your conversation as a good first step. Some may not give you a “yes” today, but at least you have informed them that you are the person they can call if they ever need an investment opportunity. Make sure to put them in your “to follow-up” list, or don’t hesitate to ask them for referrals. You might be surprised at where a simple question can lead you!

 

Want to learn more from Hillary and Marco? Listen to the full episode on YouTube, Spotify, or Apple Podcasts.

 

Outline of the Episode:

  • [2:01] Being guided to the right path early on through “Rich Dad, Poor Dad”
  • [3:08] What did Marco learn from becoming an agent and doing wholesaling?
  • [4:04] When Marco met Hillary – the rest is history!
  • [6:11] Deciding to leave their day jobs during their honeymoon with a baby on the way!
  • [8:51] Utilizing private money to acquire properties
  • [10:42] How to find private money lenders. It’s actually quite simple!
  • [11:51] Refining your systems and processes. Learn from Hilco’s years of experience.
  • [12:56] The awesome thing that can happen when you shift your mindset.
  • [14:09] What’s Hillary & Marco’s secret to a great relationship with their investors?
  • [17:08] The value in taking good care of your private money lenders.
  • [18:56] Where to start looking when you need private funding? First, you’ll need a pen and a piece of paper!
  • [20:29] Planting a seed of trust with your potential investors.
  • [25:06] What to do when you’re not good at asking for money?
  • [28:33] A private money lending partnership is a win-win relationship!
  • [30:05] Structuring deals and negotiations with your private lenders.
  • [34:18] How do you get out of an existing loan?
  • [36:39] Working with multiple private lenders. How to manage investors of different liens.

Resources Mentioned in the Episode:

Connect with JD, Annabel, and Melissa!