A few months ago, I was turned onto a great apartment rehab deal. It was a slam-dunk in my opinion, a no-brainer. After tying up the deal and doing some due diligence, I came to a shocking realization. My money partners that I used for years and years were gone! Some were just plain scared of the times we were in. Some had financial losses from their businesses and from the stock market. To make a long story, I ended up closing on the deal eventually, but it was the hardest money-raising endeavor I’ve ever encountered. And I was not alone. After I shared my experiences with fellow investors, they told me of similar stories, some of which did not turn out as good. So, I consider myself starting from square one on finding new money partners. I like doing things together, so let’s do this as a team shall we? Here are a few questions I started with myself. See if they resonate with you too.
Question: When do I start looking for money partners?
Answer: Right now is the time. You never know what deal may require a money partner. Therefore, always search or qualify, and be on the lookout for money partners at all times. Keep your “money partner-finding hat” on at all times. Family get-togethers where their friends are invited is a good and friendly place to toot your horn. Whenever you’re networking, always “be interested” in who’s sitting next to you. Ask them what they do for a living so they’ll ask what you do. Once they do ask you this: you’re on!
Question: What do I say if I were to run into someone that’s a possible money partner?
Answer: Simple, just say the following. “Hey Bob, do you know of anyone who may be interested in this great real estate deal I have?” That’s how it all starts. You’re not selling or pushing anything to Bob. You’re asking for his help and people generally like to help other people. Bob may answer you by telling you that he is interested personally or he may know of someone who may be (like himself!).
Question: What do I say if they ask me how much could they make on my deal?
Answer: By law, you cannot promise them a certain amount or range or percentage. All you can tell them is that it appears to be a great deal, but every deal has risks. Get their contact info at this point and follow up with them the next day with the deal details and specifics. Once you follow up with them, put your “counselor” hat on as opposed to your “salesman” hat. No one likes to be sold. Most everyone likes to be counseled. Know the difference and it could make all the difference.
Question: I am a beginner and I have never raised money or asked anyone for money. What should I do?
Answer: To overcome “beginneritis”, attain credibility, and get people to invest with you, here’s what you must do: One, your top priority is to preserve and protect your investor’s capital. Everything you say and every plan you come up with must be designed for this. Have “capital preservation” on your brain! Two, do your homework and research. Overwhelm your potential money partner with so much information that he knows that you have done your due diligence. Three, come up with a short business plan. This will provide clarity to your money partner (and yourself). And lastly, four, come up a 2-page executive summary that shows the big picture. Your money partners are busy people and want you to cut to the chase. If you can’t explain your deal on two pages, it’s too complicated.
Question: What is THE ONE most important thing in finding money partners?
Answer: ASK. You gotta ask! This is a universal principle. It’s quite natural to be nervous, cautious, and even intimidated in asking for money. All I can say to that is, “You have not because you ask not”.