How to Define Your Program to Private Lenders

Just when you think we’ve got all the bases covered when it comes to getting private money from prospective lenders, I show up to give you even more awesome insight into the world of private lenders and how to best present your investment opportunity to them.

We’ve been talking a lot recently about presenting to private lenders – how to set the stage, how to get their minds primed for your proposal, and how to ask the right questions the right way.

So today, I’d like to share with you my thoughts and expertise on how and why you must define your investment opportunity to private lenders, so they can clearly understand what you’re offering, how they fit into your program mold and what’s in it for them.

Your investment opportunity is worth it

Opportunity. It’s (technically) defined as a favorable, advantageous or appropriate combination of circumstances.

Sounds promising right?

And your promising investment possibility can be and should be presented during your PowerPoint presentation. Presenting YOUR program during your presentation suggests to private lenders that you are indeed a real estate investment company with advantageous possibilities – with opportunities worth learning about.

It’s worth noting – you could (again, technically) work a specific deal that you need to get financed into this section of your presentation, but I don’t recommend it…

If your prospect is interested in getting started, match them up to one of your deals right then and there. If their interest level hasn’t quit peaked, follow up later and each time a new opportunity comes along that fits their bill.

Define your opportunity by knowing your niche

You know that your investment opportunity is valuable, and you’ve conveyed that value to your prospective lender. Well done.

The next step is to clearly define your opportunity or program. What exactly are you offering your lender?

Over the years, I’ve trial and errored many different ways to describe my program, but I’ve learned that it all boils down to 4 critical ways to best define it

…and it’s all about knowing your niche.

Investment Range

It’s as simple as this; what’s your price range? I typically work in the $100-$200 range, but I present in the $25 – $250 range to cover my bases.

Know your range, stick with it and clearly state it to your lender.

Time Frame

The amount of time your notes will require will depend largely on your exit strategy. If you’re a flipper instead of a buy/hold strategist, for example, you’re probably not looking to borrow money for more than a year, right?

Personally, I present both a short-term invest range (6 months – 1 year) and a long-term range (1-5 years). It really just depends on your goals and needs.

Rate/Profit Share

You’ve got to know what range of rates and/or profit share you plan to offer.

I always present a specific rate. That’s just how I roll.

I know investment companies who present one option with rate and one with profit sharing, and I always ask what the motivation is for doing so. Some investors think offering both options helps to entice lenders. In my experience, it’s not necessary…

You can, without a doubt, find people who will invest with a good interest rate that works for both of you. But test the theory for yourself.

Repayment

How do you plan to repay your lender? Are we talking interest only, are you paying in one lump sum at the end of the note?

Define your payment plan, and make sure you’re both on the same page.

Last but not least

Having an easy-to-understand structure to your program will help to educate your prospect… and education is powerful.

Be sure your private lender understands that what you are presenting is a typical investment structure. It’s not set in stone, necessarily.

If you define your program by first understanding your niche, you can absolutely, successfully present your promising possibility – your awesome opportunity – to your private lender prospect.

I’m listening

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