Raising private capital for real estate transaction…
It happens all the time.
(Every day, in fact.)
But it makes sense, right?
After all, to do anything big requires funding. If you don’t have a large stash of cash somewhere that means you’re going to have to find the funds to do your deals. You need investors.
The good news is that investors are everywhere!
That’s just one of the “secrets” I want to share with you about raising private capital.
If you’re reading this in a public place or at work, look up. Do you see other humans? Guess what they’re called. Sure, they have names and you might know a few of them, but they’re also potential investors.
Of course, you can’t just walk up to them and ask. That would be rude and they’re going to look at you funny. Use some finesse, will you? Let me give you the words that are great ice breakers. Then let me give you the “magic” words that will keep the conversation flowing.
Here are the 5 secrets you need to know to raise private capital:
1. Investors aren’t hiding!
Contrary to popular belief, investors who will let you use their cash and/or credit in your deals aren’t hiding behind the curtains in their mansions and they aren’t “hard to find.” Some are in mansions, sure, but most live in homes like yours. Or condos. Or apartments. And sometimes even in RVs. (No kidding. One of my steadiest investors travels the country in an RV. He checks in from time to time.) You pass investors on the street every day. They’re at the table next to you in restaurants. They’re on the beach and in shopping malls. Anywhere you see people, you also see investors.
2. They’ll let you use their cash/credit because there are benefits involved.
Have you ever browsed the tax code? Those who provide housing and other necessities in life get tax credits. That’s great news for investors. With Real Estate investments come lots of tax deductible expenses. Also great news for investors who (believe it or not) may not need more money, but they sure could use as many deductions possible. Real Estate also provides cashflow in various forms. That’s why a lot of people get into investing. The returns are greater than you can find in most retirement accounts and certainly far more than in a typical savings account at your local bank. Real Estate Investing is an excellent vehicle to drive you toward a much larger retirement nest egg. That’s why you see people switching from a 401K or other account to a self-directed IRA. (They can choose where the money is invested instead of having someone or some group dictate the investments.)
3. You don’t need “magic” words to open conversations with investors.
You talk to people all the time, don’t you? You’re standing in line at the coffee shop or the movies. You strike up a conversation with strangers to pass the time. Why not work in the topic of Real Estate Investing? It becomes natural when that’s what you’re really interested in. You’d be surprised by how many other individuals are interested… or by who they know that are looking to invest. There are 10 words I use literally every day at some point with people I have never met before. “Have you ever considered getting involved in Real Estate Investing?” They’re gonna say “yes” and tell you why, or they’re gonna say “no” and tell you why. Either way is fine by me. The more I know, the easier it is for me to solve their problems. If it’s a “yes,” great! I ask them, “Really? Why?” and then shut up, so they can answer. If they say “no,” great! I ask them, “Really? Why?” and then shut up, so they can answer. (It’s called a conversation. You’re getting to know about the other person. If you’re smart, you’ll let them talk… a lot.)
4. One of the absolute best places to find investors is at Cashflow games!
You read my other two posts in this three-part series, so you know I’m an advocate of the game. There’s a reason. It is the BEST networking tool on the planet that gets people on board with your vision. (Pun intended.) Literally every member of my team came to me as a result of playing Cashflow in a group setting. They may not have been in the room with me, but either they were in the room with someone I knew or I was in the room with someone who knew them. Networking comes in different forms. It can be direct, and it can also be referral-based. The game puts you in the room with other investing-minded souls. But it also puts you in the room with business owners, entrepreneurs and professionals from all walks of life, and people of all ages, races and cultural backgrounds. It puts you in a position to talk a bit about yourself and your goals. (This is where your elevator pitch comes in handy. Ultimately, someone will ask you what you do and why you like playing the game.) You don’t have to be good at the game at first, but every time you play you’ll understand that much more about investing. Soon you will want to host your own games!
5. You don’t have to open your mouth to attract attention.
There are some really fun ways to get people to approach you about Real Estate Investing (or whatever you need money for). One of Sep’s secret weapons is something he puts on the outward-facing part of his laptop when he’s sitting at Starbucks. It’s a message that gets people to come to him. Remember that Sep is shy. He’d prefer that people approach him instead of the other way around. There are also flashing LED badges with messages, bandit signs, cards you can place on cars (that’s how I did it when first starting out) and clever ways to leave very quick phone messages that almost assures the person you’re calling will call you back. However, you need to be prepared to start talking when they call you… or approach you in the coffee house. Once again, it’s not a scary thing. It’s a conversation. You have them all the time.
The list could be longer than just 5 things, but I want you to have something you can use right now, today, to see if they work.
You CAN raise private capital faster than you ever thought possible. It wouldn’t be fair to say it’s easy breezy and literally anyone can do it, but if you really want to raise private capital for Real Estate transactions or other investment purposes, you can. You just have to know what to do and how to go about it.
If you think you need deals first, you’d be wrong.
Here’s a sixth secret on the house. You absolutely do not need to have a deal before you find investors who want to invest with you. Why? They’re investing with YOU. They are looking for solutions to their problems. You can provide the solutions through your investment deals.
The tips you’ve read in this article are just the tip of the iceberg.
When you’re ready to learn more about raising private capital so you don’t have to use your own cash and credit to fund all your deals, click the box below!