IMPORTANT: Private Money and Cash Flow

Posted on November 6, 2013 by

One of the most important rules to remember is that…
Cash Flow Starts and Stops a Business.

As my career has matured, I have realized that the best way for me to grow my business is by making others wealthy — making YOU wealthy. I want you to learn from my mistakes and enhance your life and your business. I know that you can do it with certain essentials in place.

This is why I want to share with you some fundamentals about how to get private money.

First: Qualify Them

Not everyone is an investor, and you need to know who will be the best prospect for you. Here are some qualifications to look for in potential lenders:

  1. They have cash in their bank accounts.
  2. They want to participate in their wealth development.
  3. Ideally, they will be over 50 years of age. Investors over 50 have different needs and may be conservative. Most investors in their 20s invest in a higher, more risky investment.
  4. They know what they are looking for: Dependability in dividends? Investments of one year, two years, five years?
  5. They must be willing to let you run your business. They must trust that you know how to use their money well.

Note: I typically give a lender control in these areas: reduction of risk, a prospectus, a track record, a stake in the investment, a good rate of return, and an investment vehicle.

Second: Help Them to Build a Dream

When I talk to people about investing in my company, I never say “borrow” or “lend.” Instead, I talk about how they can invest in their future.

I talk about how they can earn enough to pay for their children’s college education, go on luxury vacations, and retire early and comfortably — if they build their wealth now.

I build a dream of what their money could be doing for them and the great returns that they can get in an investment other than a CD or 401k.

I make sure they know that I want to support them in achieving their dreams by giving them opportunities.

Third: Talk About Risk

You’ve qualified the lender. You’ve shown them the possibilities. Now it’s time to earn their trust by being honest: talking about risk.

Lenders want to know that you have integrity and morals, that they can trust you.

They want to know your track record so that they can see your successes. But what if you don’t have experience? You can still demonstrate your morals and integrity. If you can show this, the funding will follow.

They want to know that you have done your homework, that you are confident in what you know. Be able to show them that your knowledge of loan to value, distance, area, and exit strategy will reduce their risk.

They want reduced risk and a payment forecast.

They want to know that you are thinking about the future. For example, what will happen with their money if something were to happen to you? You need to be able to answer this question with a solid plan.

The Private Money Presentation

Another way to allow lenders to feel comfortable with you is to talk about the ways for you to reduce their risk and provide a secure investment.

When meeting with a possible lender, you must remember:

The lender is buying a dream. The lender is buying a future.
Your presentation is about their needs, not yours.

Here is a Quick Start for your Private Money Presentation:

  1. Ask if they have any extra cash that is not working for them.
  2. Ask if they’d like to make their extra cash work for them.
  3. Ask about their needs and desires.
  4. Find out how much risk they are willing to take to achieve their goals.
  5. Find out if they have ever invested in real estate.
  6. Talk about the high rates of returns that you are currently getting in your real estate business.
  7. Give an example of a great deal that you are looking to close in the near future.
  8. Follow-up over a number of weeks so that you can maintain a relationship. Update them about the deals that you have spoken to them about. This way, they can see the growth and progress of your abilities.
  9. Talk about how they can create their dreams by supporting yours. Show them that you are working for a common goal.

If you’re in Atlanta, join me and other successful investors at the Atlanta REIA Creative Deal Structuring Subgroup on the first Wednesday of each month at 7:00 PM at the JAYA Center located at 3845 N. Druid Hills Rd, #101 in Decatur, GA. Let me coach you to learn the market and find your niche!

I am looking forward to meeting you and helping you on your way to success!

Russ HinerRuss Hiner is an active real estate investor, coach and mentor. Russ is currently the leader of the Atlanta REIA Creative Deal Structuring Group and Atlanta REIA Mastermind Group. Russ also teaches several workshops throughout the year on a variety of real estate investing topics such as Negotiations, Wholesaling 101, Wholesaling 401, Real Estate 101, Property Management and more.

Contact Russ Hiner

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