In this episode, I discuss how I have found virtually all of my private lenders. Finding private lenders in real estate is essential in my opinion. You can invest in real estate without private funds, but having private funds has some very distinct advantages. One of the biggest advantages is the ability to react quickly. Because with most private lenders you won’t need to fill out endless paperwork like you would with a bank, you’re able to get to closing much faster.
This gives you the advantage of speed, which is huge in real estate. As I have mentioned in the past, I haven’t used my own money to purchase or renovate any of my flips, except my first. This did not happen by accident. One thing I have learned as a real estate investor is that if you want good things to happen in your business, you need to get out and talk to people about what you’re doing. After I did my first flip, I went back to the mastermind group that I was involved in at the time, and just started telling my story. Now, I had luckily flipped my first house successfully and made a decent profit; and I told everyone who would listen. Below, I have made a short list of actions that I use all the time to secure more financing:
- Talk to everyone in your network. Attend real estate investing meetings in your local area and network your butt off. I’m not talking about bragging, but just letting everyone know what you did and being very honest about the numbers.
- I created a Facebook fan page; these are now considered business pages. I created mine when Facebook first introduced the feature. I posted pictures and video of my rehab project, as well as videos of me just talking about what I was doing.
- I also started using Facebook ads. I created a few very inexpensive campaigns; I believe I was only spending a dollar or two per day. That generated a lot of interest in what I was doing. I was driving traffic back to my fan page, where people could see videos of me and my wife discussing our business. This brought in a lot of interest, and inquiries about how people could get involved.
- Based on all of our networking activities, my wife and I were asked to speak at local real estate investing clubs. We talked about our business, how we find contractors, how we go about renovating houses etc. This also created interest, and before long people were coming up to us and offering to loan us money.
Based on these four things, we were able to secure several hundred dollars worth of financing. Getting the financing in place is only the first step. You must treat your investors well and do everything that you promise you’ll do. In fact, you need to over-deliver whenever possible. Only by doing that will you develop relationships with investors who have a great interest in continuing to invest.