The Chicken-or-the-Egg Question for Investors
“Success is where preparation and opportunity meet.” – Bobby Unser
Whether you’re buying $80,000 fixer-uppers or multimillion-dollar office towers in downtown Chicago, you have to answer the same two fundamental questions before making the decision to invest:
- Is the property a good deal?
- Can you get the money to buy it?
So what do you do first? Find the deal … or find the money?
Most people think you should find the deal first, but I disagree. Let me tell you why.
When it comes to killer deals in real estate, you’ll often find that you need to pay all cash and have the ability to close fast. The minute you find the deal, the clock starts ticking. And if you’re depending on a bank for financing, you’ll have to go through a lengthy qualification and approval process. That leaves the door open for your competition to step in with cash and squeeze you out completely.
But that won’t happen if you have funding lined up in advance with private lenders.
The sad truth is, even experienced investors lose deals because they simply aren’t prepared.
Take David Weaver, an investor from Florida. At one of my seminars, he confessed to me, “Alan, I have been in the real estate business for 36 years. I have always had the money shortage that all investors have. We are always falling short of money to move to the next level.” But now that David understands the power of private money lenders, he’ll be able to leave that money shortage behind for good.
Then there’s Esther Headly. She was an active, experienced real estate investor who was losing five to 10 deals a week due to lack of funds. After discovering private money lending, she raised $240,000 within 24 hours. After a few months, she had a whole group of private lenders lined up – and now there’s cash ready and waiting for her whenever she comes upon a good deal.
William McCarty left $120,000 on the table for other investors before he realized private money could have saved that deal.
Yet another investor, Gary Brevko, was investing in real estate on the side while working at his full-time job. But what he really wanted to do was find a way to do real estate full-time. Gary was making a respectable $250,000 a year salary, so the prospect of leaving his job must have been daunting. Then Gary discovered private lending, and everything changed. Now he’s making $30,000 to 40,000 per month in real estate.
The Biggest Advantages You’ll Have Over Other Investors
I’ve done over 200 real estate deals in my career, and I rarely lose a deal because of lack of access to money. But it was a different story when I first quit my job to do real estate full-time. I had to face the new reality that I could no longer qualify for bank loans.
Once I had to stop relying on banks, I was forced to go out and find my own private investors to loan me the money. In doing so, I discovered that financing my real estate investments with private, “investor friendly” money gave me distinct advantages over my competition. The two biggest perks are:
- Quick access to money
- Increased cash-flow
I never have to wait for approval, and I can even structure my loans so I don’t have to make monthly payments.
Growing Your Income With Private Lending
Grow your real estate business the smart, efficient way. Make sure you never lose a deal because of a lack of money or speedy access to money. Rather than searching for the best deals, start by finding the money.
Begin your search for private lenders by creating a marketing kit about your business. Mine is a 30-page, spiral-bound book. It has a nice cover with colored pictures of over a dozen houses that I have bought and rehabbed. That way, before potential lenders even open the book, they see before-and-after pictures that show I am a seasoned real estate professional.
Make sure your marketing kit includes plenty of credibility-boosting information. Even if you haven’t done a dozen rehabs, there are of ways to do this. For example, include an introduction that tells lenders about you, your company, and your business philosophy. Include pages of testimonials, copies of certificates from training you have completed, and informative special reports. The idea is to include page after page of information that sends the strong message that you know what you’re doing.
Here’s another hint: Since real estate investing is a serious, responsible business, you can join the Better Business Bureau. I did, and that means I am authorized to use their logo on my material … which further enhances my credibility.
Once you have a solid marketing kit, you can start doing targeted mailings to lists of potential lenders. I’ve found that people with money in CDs or Self-Directed IRAs are particularly good prospects, because you can almost certainly offer them a higher return on their money than they’re making right now.
You can then present your full sales pitch in person to those who show an interest in the information you’ve sent to them. A good way to do it is by hosting a luncheon. This strategy has been very successful for me and my students. In fact, I’ve had many students who’ve raised $100,000 or more almost instantly by using this combination of credibility building, targeted advertising, and luncheons.
You can easily duplicate their success.
Once you’ve got the money lined up, go out and find the deals. You may be surprised at how many more deals you can make … and how quickly you can complete them … by using private money lending.
[Ed. Note: Alan Cowgill’s Private Lending Made Easy program is the only one on the market that specifically explains how to find and manage private funds. If this topic interests you, a great way to get more information is to attend the free teleseminar. that Alan will be giving exclusively to ETR readers this week. It’s a no-cost way to build your knowledge base and find out if private money could help you increase your income this year. Reserve your seat now.]