6 Sure-Fire Ways of Attracting Private Money Lenders

Posted on: October 9, 2011

Categories: Buy, Other Articles

Author: lbuen

Private Money Lenders – The Most Convenient and Flexible Source of Funding

As you already know, funding for your real estate deals is essential; without which, the deal cannot proceed. However, you may have noticed that with the present real estate market falling apart at the seams, getting funding is not as easy at it used to be. Requirements for traditional funding have become tighter. You cannot get a Fannie Mae and Freddie Mac loan for your real estate investing deals. Sourcing from hard money lenders can cost you by as much as 25 percent in interest and points. Because of these, more and more investors are turning to private money lenders to finance their deals. But with so many real estate investors seeking non-traditional funding, how do you lure these financial backers to invest in your deals?

How to be a Magnet for Attracting Private Money Lenders

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Attracting Private Money Lenders Image by jtyerse via Flickr

1. Real Estate Website

Social media has changed the way businesses are conducted, and this includes real estate investing. An online presence helps make you to be found not just by potential buyers and sellers, but private investors, as well. Your website is your presentation tool that can reach potential personal money investors that you may not meet face to face because they can be from the far corners of the USA, or even the globe. Your website must depict your credibility and success as a real estate investor so that potential private money lenders will feel safe putting their money in one of several of your deals. Even at this phase, you can start cultivating a relationship with potential personal money lenders.

2. Networking and Incentives for Referrals

The very first private money lenders you possibly could have are the people you already know, such as your mom, your relatives, a colleague, or your neighbor. Tell everyone you know and meet that you are looking for private funding and highlight that the ROI is greater than when the money is parked in the bank. Ask people you know to introduce you to people they know who have money to invest. Offer incentives to people who can successfully refer you to a personal money lender. Just do not forget to factor in this expense to your real estate deal.

3. Your Present Private Money Lenders

When looking for more investment property funding, you may not have to look far. Consider your existing private investors. As long as you keep them happy by delivering the promised ROI, they would be more than happy to invest again in another deal with you. They do not need much convincing from you since they already have a good business experience with you. So do not forget to also present other real estate investing deals you have to them.

4. Word of Mouth Marketing

Existing private money lenders who are happy with your deals will not just do a repeat-business with you, they can also recommend you to their friends should you need more funding for your other deals. If they don’t, all you need to do is to ask them.

5. One-on-One Presentations

Many people may not be convinced to put their money in your deal when you casually mention it while networking at a social gathering, or when people have stumbled upon your website. This is where one-on-one presentations come in. You can set an appointment with them for you to make an informal presentation about your deal over lunch, dinner, or coffee. Honestly discuss them how they can benefit from this deal, the potential risks involved, and the safety nets to secure their investment. This is your venue to convince them of the profitability of the deal, and win their trust.

6. Organize an Investors’ Dinner or Luncheon

To convince more than one investor in one presentation, you can also organize an Investors’ Dinner or Luncheon. By gathering these potential investors together, you can create an atmosphere of competition among them by letting them know that the real estate deals are limited and not everyone’s investments can be accommodated right away. You can set a first-come, first-served rule. When you have gained a good name among private money lenders, you can even ask them to pay their own dinner during such gathering.

The success of your property investing business cannot perpetuate without a ready supply of cash. Hence, knowing how to go about attracting private money lenders is a must for any real estate investor.

 6 Sure Fire Ways of Attracting Private Money Lenders
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