Spending hours chasing the next deal may seem like a piece of cake compared to trying to find private money lenders to fund it.
But if you’re like most investors, finding new private money lenders is a necessary part of leveraging your business. Without it, you can’t up your game and go for the really big deals, but it’s a process that can seem daunting to the best of us.
Fortunately there’s a simple way you can find dozens of potential new lenders, and you don’t have to worry about using some sleazy technique in order to do it.
TELL EVERYONE YOU KNOW WHAT YOU DO
One of the best ways to get new investors is to simply TALK about what you’re doing.
No, that doesn’t mean monopolize every conversation until your listeners fall asleep from boredom. It does mean, however, that you have an elevator speech ready to describe what you do. In order to craft a brief, people-friendly message, first take some time to write down all the things that you do.
Look at the list, and try and pull out the two or three most important things from the list. Try to make sure that these two points are general enough to make sense out of context, but not so general that you sound like any other investor out there.
Once you have an idea of what you want to say, PRACTICE! Try first on friends and family, and rather than badgering them about what they think, watch their eyes. Do they wander, or look glazed when you talk? Or do you see a spark of interest?
Edit your pitch some more until it’s clear and concise: now try it out on people you don’t know.
Hint: Never pester people with all the details of your business unless they ask for it.
The best elevator speeches are meant to inspire the desire to find out more. If your pitch doesn’t cause the other person to ask questions, then either they’re not in the market of being a lender – or your elevator speech needs some more work.
APPROACH YOUR FRIENDS AND FAMILY
No, I don’t mean to ask for more money. You’ve probably done that already. What you want is to get referrals to people who might be interested in lending you money for your project.
In order to get names, be careful how you phrase things. Saying:
Do you know anybody who wants to make an extra $10,000 by doing nothing?
… will end up sounding like you’re running card games in your basement. Be casual, sincere, and not too over the top about it.
The best way is to ask simply and clearly if they know anyone who might be interested in investing with you. This pool of names you’ll get will be much larger than your initial group of friends and family, and they’ll be easy to approach since you can always add an, “My sister gave me your name”, before you start your pitch. In order to succeed with this group of potential investors, you’ll need to work harder to establish CREDIBILITY.
Because they don’t know you, they’ll be less likely to want to say YES. Create a presentation, and take your time by inviting them to lunch, coffee, or a drink in order to build a relationship, which is the key to finding private money lenders. The most important thing that private money lenders want to know is whether their money will be SECURE.
After all, they’ve gotten to where they are with a lot of hard work, and aren’t interested in jeopardizing their money for a risky, no-fly venture. However, giving them a chance to get to know you, to see that you have extensive knowledge in the field of real estate investment, and are trustworthy, will get you most of the way towards your goal of finding new private money lenders.