Are You Asking the Right Questions to Borrow Private Money?
Posted by Patrick_Riddle
Filed under Private Money Articles, Private Money Monthly
The most effective strategy to borrow private money is to ask your prospect the right questions. Questions that elicit motivation, questions that uncover goals, questions that make the prospect imagine themselves enjoying and benefiting from your investment program.
When you borrow private money, here are 5 questions to ask prospects . . .
(Quick Tip: Make sure to write down everything a prospect tells you when you’re going through these questions. This is valuable info!)
1) What experience do you have investing?
Find out if they are or have invested in CDs, mutual funds, bonds, stocks, real estate, race horses, or gold. This will help you get a good picture of the type of investor you’re dealing with, their expectations, how knowledgeable they are with investments, etc.
If they have any experience investing in real estate, you want to know the details. What did they like? What did they dislike?
The prospect’s answer will indicate whether they primarily move away from pain (losing money or earning meager returns) or towards pleasure (making more money/better returns/financial freedom). Note whether they move away from pain or towards pleasure. You will present your investment opportunity to them based on this information.
2) Are you happy with the performance of your investments (investment portfolio)?
Whether they are happy with it or not, you ask the same question next . . . “What average rate of return have you been getting from your investments?”
At this point, if they tell you a 20% annualized return, you can let them know it was nice talking with them and move onto the next prospect. You just saved yourself some time.
Let’s say the prospect said he or she was earning a 6% return on x-investment. At the end of your presentation, you could say something like, “Well, I’m not sure if we can do this or not but . . . what if we could offer you a 8% annualized return backed by real estate . . . would that be something that might work for you?”
3) Whether or not our program is a fit, is it important that you find the right investment opportunity soon?
If they say “no,” this may be a good person to add to your follow up list. You could also say something like this to them, “Sooooo if the money stayed in x-investment earning x% for say another 6 to 12 months, you would be fine with that?” Or, “If your money just sits there earning you nothing for x-time, you’re ok with that?”
If they say it’s important to find an investment soon, you have a green light to continue moving forward towards turning them into a private lender.
4) Are you more interested in making a quick buck or building wealth?
This is another way of asking if the prospect is interested in a short or long term investment. We would prefer that the person invest long term. So by saying “quick buck,” we’re already putting a negative connotation around that idea. The longer term you can negotiate, the better.
If you find out the prospect just wants to make a quick buck, it may be best to move on.
5) What would the right investment provide for you?
This question is key to get the prospect visualizing a positive experience with your investment opportunity. And we’re not even referencing our investment.
Get your prospect to imagine retiring one day with complete financial security, going on that dream family vacation, feeling safe and secure and your prospect will associate those feelings with your investment program.
Remember, borrowing private money is all about asking good questions. So ask good questions and then keep your mouth shut. The more you learn about your prospect, the better the chance of converting them into a private money lender.
– Patrick and Trevor
I have a buyer who is trouble qualifying to purchase a fantastic feed store/home residence 10 acre commercial property – fantastic property – great price of $1.5 million Price includes all inventory, all equipment. However, seller’s W-2’s show write off’s to the point where buyer cannot use the business income reflected to qualify for mortgage of that size. Will lenders be interested in working with individual buyers of mine?
Thank you very much !!
Please be advised that we work together for a new prroject or purpose in the future.
Hey Guys,
It’s Nick in Las Vegas. If you guys make it out here, make sure to look me up, we’re doing big things!
Anyhow about the 30 second thing, the old timers used to call it an elevator speach, or an ice breaker.
This is a new millenium, how about the “short and sweet” or the “fast 411”.
Example. I met a doctor with a sizable IRA, after I gave him the short and sweet, he couldn’t wait to get his money working on a deal.
God Bless fellas, holla at your boy!
I checked my fico score an it was in the toilet. 588. Mostly medical bills that I thought my insurance paid.
.
Although private money is a valuable resource that I already have for short term fractional funding. I need investors to buy good valued property that is available to those investors willing to hold on loan return until after property sold. The fact is that a buyer is not always available for immediate resell or that financing falls through.
Another good strategy is buy and hold Lease options and land contracts and rental for cash flow to service loans and create cash flow. As I see it many programs that hint at quick cash or not always dealing in the realm of reality only potential reality. The lowest risk potential is buy hold appreciate property then resell later at a profit then repeat.
A good arrangement would be to the buy hold real estate with a positive cash flow. Another arrangement would be to loan money for deals with 10% IOU and or 50/50 profit split with money investor after sale.
The ideal marketing method would be to market to investors that are looking for better return on there self funded IRAs and or those with cash or rollover money that can be 1031 into real estate for best protection from capital gains taxation.
The use of and alternate quick financing such as seller assist fractional funding would be of great value to many investors due to the speed to get this money to do a deal may take some time to access personal investment funds to buy best deals and finance with available funds to complete deals for resell.
Alternate funding is a win win situation for the investor looking for better return on cash
Please refer back to this site for more information and for endless free resources visit REIclub online
This site offers endless educational resources for free with no monthly fees. You can connect and network with other investors for even more resources.
Happy investing and good luck in your ventures fellow investors
Pat.
I have been aquiring properties via quit claim deed from owners whom have been forclosed , and the complaintant has dropped and dismissed the case, leaving the property in limbo. By becoming the legal title holder I then can file a Quiet Title action to clear the lien (mortgage), they have 28 days to respond to this action, if the don’t, a default judgement entry removes the lien. Leagal costs, Realtor commissions, Taxes and Special assesments and the fact that most of these properties have been heavily vandalized by copper and aluminum thieves. Add to that, the fact that they already have r.e.o.s in the area that “if “they sell, its for an amount that discourages them from getting any more of them. I have been cherry picking the ones that have minimal damage and will require $10,000.00 or less to clear title and make repairs for resale and/or good cash flow rentals. I am looking for private money to start on the 9 I have already aquired, and I have more in the works.
You guys should touch on how to start private funds, so you can raise a pool of money for all your deals. I know you had Susan Lasitter on talking about Fractionilized Notes, but it is not the same.
i am an investor of realestate looking for those cash people at 10% money secured by 1st mortgage 50-60% ltv. any help. 401-949-0908 or kevinsr@kevinesweet.net
Hi there Richard and I, Krystal have a home we want to buy as an investment and live in. We are offering 6 % on 30 year with $100K at 5 years and $100K at 7 years. if we choose to stay in the property. or $200K at time of sale if before the 5 year mark. . Property is a pockect type listing. and avail ON WATER in the OC value $3M on a good day. $2.5M on an okay day. We need $1.5 to get the property and we need to do it NOW. IT wont Last – HOLIDAYS are here and not many people are shopping for property – best time to BUY…… is Now. We have both seperately owned homes over $1M before. We make excess combined income of $700K. We both have rental property and investments The property would obviously be the security… 714 815 4350 krystal@freightConnection.com 949 371 7000 Richard