Elevator Pitch: You’ll Find Private Lenders
I have been getting a lot if emails and calls lately from my students. It seems they are having success finding private money. They are taking action on the ideas we’ve been discussing and it’s working.
Imagine that!…go figure!
I’m also getting calls from outsiders asking, How/Where do I find the money to fund my deals.
Well, I do have ideas on this…good ideas. I’m sorry to report I do not have any “quick easy” ideas, but, I know some practices that have always worked – eventually. “Eventually” meaning, when you “eventually” get around to taking action, they will work; you will find private lending sources. It’s a numbers game. So let’s talk about getting your numbers up.
1. You should be starting to build your team and who’s going to be working with you day in and day out; CPAs, Bookkeepers, RE Attorney’s, estate planning attorney’s, realtors who understand what your looking for.
2. Now, call on 10 of each. 10 CPAs, 10 RE Attorney’s, etc., etc, Tell them you are building your team. Show them your business model. 7 out of 10 will ask you, “Who loaning you the money to buy the properties?” …be prepared to answer; “Private individuals that are afraid of the stock market and tired of 1.5% rates on CDs, why? …do you know someone we can help?”
Never ask the people to loan you money directly. Show them your model and see if they don’t ask you first.
You know a person that is very successful and most likely has a substantial nest egg and/or retirement fund. Instead of approaching with, “I’ve got an investment idea I think you might be interested in.” Try a different approach.
Call up your prospect (let call him Tom) and say, “Tom, I’ve always admired how successful you have become. I’m thinking about jumping into a business venture but I’d really like it if someone successful like yourself would look it over and see if there are any holes in my plan. It very simple really. I think a guy like you could size it up in 10 minutes. Can I buy you lunch and you tell me what you think?”
Go to lunch. If they don’t ask you, “who’s loaning you the money to buy the houses, ” do the old “Columbo Close” …as your leaving, stop, turn around, put your hand on your forehead and ask, “Oh, one last thing; do you know anyone I could help by giving them an 8% return on their money?”
Dennis T. Has a one page hand out he gives to people.
He asks as he hands them out,
“Hey, when you have a chance, can you look over my business model and tell me what you think?”
Here’s what Dennis T’s hand out looks like.
Purchase Price ……………..$23,000
Finders Fee…………………..$ 2,000
@ 8% Interest Only, 5 yrs
Monthly Payment = $167/mo.
Down Payment………………-$ 5,000
Owner Finance Balance……$50,000
@ 11% for 22yrs
Monthly Income = $503
$503 – $167= $336/mo
Positive Cash Flow
Do you think 8% is a fair rate of return for the person who loaned me the $25, 000?
Call me with you opinion please.
I talk about these methods extensively in my course and on the weekly Q&A.
(Learn more about how to register for the Q&A at 1000Houses.com/Menu)
Tune in this on Tuesday nights and you’re going to hear from a guy who talked to his first CPA (using this strategy) and hit pay dirt! He’s 1 for 1!
Another student, Jing, has pick up her 3rd private lender, Dennis M. signed up his dentist right before they pulled his tooth, and Dennis T. just emailed that the little document he hands out once a day just landed him his first private lender. This is all in the last 2 weeks.
Dennis M. has a goal to tell one person a day his elevator speech;
“I help people lower their risk and substantially increase their returns on the money they have saved.
I give valuable real estate as collateral. Would you be interested in hearing how it works?”
I teach that you give your elevator speech to someone – anyone – one time a day. If the only person you can get in front of today is the 19 year old waitress at the place you buy breakfast, then tell her.
You see, it’s the habit that has to be exercised. As you start developing this daily habit you’ll start learning to recognize “higher potential” targets. As you get comfortable with people’s reactions you gain confidence to say it to more and more “important” looking figures.
Learn to get people to ask you what YOU do. How do you get people to ask you what you do?
Well, try asking them what THEY do.
Imagine you’re waiting for the elevate and a very successful looking man strolls up to do the same. You say to yourself, “I’m going to see if I can help this man.”
The elevator arrives, you both enter and immediately you say to the man, “sir, you look like a very successful man, would you mind if I asked what you do for a living?”
The man goes on to explain his job and then asks you the natural question, “…and what do you do for a living?”
Bam! Give your elevator pitch.
You just got your “one a day!”
If he’s interested, you’ll know. Ask for his card. If he is not interested, – NEXT! You accomplished your goal. One a day.
(NOTE: Getting a card is better than giving a card. When you get a card YOU are in control.)
There are all kinds of variations on this example.
The point is this;
Access to Private a Money is the key to building wealth. If you have an unlimited supply of private funds at reasonable rates and terms you can make all kinds of business scenarios work.
Want to buy an apartment complex? Well, if you could borrow money at a reasonable, rate right now, how long would it be before you purchased a lucrative apartment complex? Maybe you’re into mini Storages. If you had access to money with favorable terms how many facilities could you buy?
Houses are a stepping stone to the bigger projects. Private money works so well in the house flipping business because the purchase prices are generally much smaller and therefore it is much easier to find private lenders with these smaller amounts if money.
It also allows private lenders to test the waters with a small investment first. My private lenders loan me millions today but every single one if them started with ONE very mall deal in the beginning…then another, then another. In the beginning they probably wouldn’t have loaned me $250k or $500k on one deal, but today they would.
In closing let me tell you this: In 2013 I bought 8.13 acres with cash I took out of my retirement account. A private lender loaned me $200, 000 at 8%, fully amortized over 18 years, $1, 750/mo pmt.
Upon my promise to build a boat storage facility on that Free & Clear land…and whereby I gave him a 1st lien on that land, he sent $200, 000 to my bank account. No bank in the world would ever do that! …Hand you $200, 000 and hope you spend it building a storage facility on a piece of land that cost $68, 000. But a private lender will.
I did what I said I was going to do. I cleared the land, leveled it, fenced it, installed a concrete drive, installed an electronic gate, and built 27 boat stalls that bring in $4, 500/mo when leased. I have not used but 1/4 of the 8 acres. This is what pirate money can do for you when no institutional lender will touch your plan with a 10′ pole.
And always remember, in the beginning it all about the deal. The deal brings the money. As time goes by and you build a solid and good reputation…it can become more about YOU when you want it to.