The First Bucket – Friends and Family
List 10 people that trust you and believe in you. Put it on a sheet of paper now. Do not infer whether ythey have money or not, because you are most likely mistaken anyways. Funding Your Deal – Module 7 – Buckets of Money
I have raised over a million dollars of private money through just 3 people which I used for financing first mortgages and renovation costs on properties that needed quite a bit of work. What usually holds people back is fear. Fear that you are going to lose peoples money. Fear that you don’t have enough experience. It is a big responsibility that you need to take seriousily. Don’t you think that they would benefit from safe, consistent returns that you are contractually obligated to provide to them?
The Second Bucket – Acquaintances, Networking, and Referrals
List 10 people that you are friendly with that you met through a sposts team, class, networking event or club meeting. Put it on a sheet of paper now.
This group of people are acquaintences that you have met and developed a relationship with. This could be other parents on a child’s sports team, clients or customers in an existing business, co-workers, people you meet at real estate events or clubs. If you are ensure whether you want to discuss real estate with a particular person, you could start off with an elevator pitch.
An elevator pitch, elevator speech, or elevator statement is a short summary used to quickly and simply define a person, profession, product, service, organization or event and its value proposition. The name “elevator pitch” reflects the idea that it should be possible to deliver the summary in the time span of an elevator ride, or approximately thirty seconds to two minutes.
The framework for an elevator pitch goes something like this “I _________ so that ______________.” If you can create and rehearse an elevator pitch, you can quickly get your point across. It might also lead to further discussions. Usually it stems from a question that another person might ask you “What do you do?”
I put together profitable real estate investments, so that my partners can make safe and consistent returns on their money.
If you encounter another real estate investor, you may want to reposition yourself and ask them a question like “What kind of Real Estate deals do you invest in?” and then follow up after the tell you that “Have you ever considered using your profits to fund other peoples purchases?”
The Third Bucket – SMART Marketing
List 10 groups people that you would be interested in finding partners. For example, dentists, doctors, parents from son’s hockey team … Put it on a sheet of paper now.
This is groups of people that would have the type of money that you are looking for and trying to attract. We discuss advertising and creating a credibility presentation binder in more detail in the course Funding Your Properties – Joint Venture Partnerships. By just defining groups where you can continuing to reach out to, you can grow your pool of money.
One thing that you should keep in mind, is that people never tell you how much money they really have access to. A potental debt partner may start off with 100,000 but then they can pool differnt resources, access a HELOC or another line of credit and then have $300,000 available. Whenever you are focusing on a group, try to keep in mind you want big, long-term, low interest loans.
Filling Your Buckets
Now it’s time to put the pedal to the road and start pulling in that money. Take that list of 20 people and start making some phone calls. You could start with one or two a week, but start building those relationships.
Look at their linkedin profile, facebook and twitter. Find out what’s going on in their life, you may even find the contact information that you are looking for on these social media sites. Talk to them and be interested in who they are and what they are doing. Let them know who you are and what you are doing. Do this before you need the money for the deal. Don’t wait to have a property that you want to purchase, and then get streessed out by trying to put the deal together. People can smell the desperation that you exude when you are desperate to put money together for a deal.
You goal is to get them to a more formal face to face meeting with you. You want all the decision makers at the meeting. So if their is a spouse that will also make the decision, make sure the spouse is at the meeting too.
You may want to use a simple phone script to help you to ask for the meeting in your conversation. After you have built some of the trust and credibility. For example, “Occasionally I use private money to fund my real estate deals. Would you mind if I contatced you occassionally with a few of the deals to take a look at?” Before you answer to many questions you can push for a time when you can meet with them.