How to Raise Private Money

October 19, 2006 — Leave a comment

by Tony Reaves

 In real estate investing the biggest thing that troubles most people is how to find the deal, and determine if it’s a deal or not.  Then its where do I get the money to fund the deal.

Most of us have heard the saying, “if you get a deal, the money will come.”

For the most part that is true, but if you have a deal and do not have the funding for it, you can lose a great opportunity.  In my opinion it would be better to bring in a partner that can help you get the deal done as opposed to losing everything.

With that said, in May’s Special presentation, I’m going to show you how to raise private money.  I have taken what others have done and set up my own system for raising money to fund the deals.

Here is your first lesson: 

Line up private money first, because once you need it, it may be hard to find. 

If your advertisement reads “We buy houses CASH.  Sell your house in 9 days or less,” make sure you can back that up by securing the funding first.

One of the best ways I know of raising money is by using a script.

So, do yourself a huge favor and call five people you know and say the following:

“I came across a great opportunity and was wondering if you know someone that might be interested in earning 12 to 15 percent on their money? If they invest, I will pay you 1 to 2 percent on the amount invested”.

Be ready to discuss the results of your five calls at the meeting. 

Rule of thumb: once you get the money use it and pay your investors back.  Try to pay out better, and sooner than expected.

This way they will have confidence in you and will most likely do business with you again or refer you to others.

In a private money presentation, you should know:

  • How to present the deal to the private lender
  • How to structure the documentation
  • What to do when someone needs their money out early.

 

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