how_to_get_investors_to_write_the_check.ppt

How to Get Investors to:Write The Check!

From $3,000 to $5 Million – How to Raise All the Money You Need to Fund Your Real

Estate Investments!

What is Private Money (And how can YOU use it?)• Buying Single Family Homes

–Subject To/Lease Options–Rehab/Repair Funds–Purchase Money–Bringing Payments Current–Funding Marketing Campaigns

What is Private Money (And how can YOU use it?)• Hard Money Versus Private Money

–Cost and Relationships

Using Private Money To Buy Commercial Property

Example:9308 Dyer – Single Tenant Office Bldg.

• 9308 Dyer – Single Tenant Office Bldg.–$560,000 Purchase Price–95% Owner Financing–5% ($30,000) Second Mortgage (Private)

• Total Down Payment Required: $0• Total Monthly Cash Flow: $700/month• Current Market Value: $800,000• Rate of Return: INFINITE!


Example:34501 Quincy, LLC

• 34501 Quincy, LLC – 955 Acres of Land– 336 Acres of that is fenced campus– 342,715 sq ft of office and manufacturing space

• 34501 Quincy, LLC

– Purchase Price: $7.6 Million

– Appraised Value: $15 Million at time of purchase

– Bank loan for 70% - $5 Million

– Raised $5 Mil in 23 Days to Fund Down Payment and Holding costs!!!

– All Private Money!


Example:• Surety Village Shopping Center

• Surety Village Shopping Center– $4.9 Mil Purchase Price– Assumed Loan, Seller-Carried 2nd Mortgage– $450,000 in private money – Investors Earning 12% return from cash flow, plus 50% of equity

4 Reasons Why Funding Gets Easier and Easier with Bigger Deals

1. Credibility• People assume you’re more knowledgeable

and capable when you’re “playing in the big leagues” with bigger properties.


2. Smaller Investments Available• You can “pool funds” and create smaller

chunks (e.g. $25,000 shares) for individual investors, rather than having one person fund an entire house purchase and have to put up a “big” amount like $100,000.


3. Bigger Investments Available• Big Money Investors can place BIG CHUNKS

of Money – e.g. $350,000 -- in one place. They don’t have to worry about “little” investments – like $100,000.


4. Top Notch Support• The deal can pay the best advisors:

Attorneys, Professional Property Management, etc.

The Logistics of Funding A Deal An Overview of the Process

The ABC’s of Any Good Sales Process:• Building a List• Screening the List to Find Prospects• Educating the Prospects• Closing the Transaction


• Note - This does not involve:

1) Twisting someone’s arm

2) Making a nuisance of yourself at social gatherings.

3) Selling ice cubes to Eskimos

The Logistics of Funding A Deal 5 Simple Things That Get Fund Raisers in Trouble

– And How to Avoid them!

1. Not Using the Proper Legal Structures – Get professional help!

2. Not Starting the Fund Raising Process Early Enough – Build Your Relationships Starting NOW!

3. Perform on your Promises! Don’t Over-Promise and Under-Deliver!

The Logistics of Funding A Deal 5 Simple Things That Get Fund Raisers in Trouble

– And How to Avoid them!

4. Communicate Well! Don’t Lose Contact With Your Investors – Before, During, or After the “Raise”

5. Slow and Steady! Don’t Fail to Track Progress During “Crunch Time” - Set weekly goals,encourage your team.

The Logistics of Funding A Deal The difference between selling a Deal and selling Pet Rocks.

1. Relationship-Based AND Deal-Based Selling

• The numbers have to work, and • People have to know, like, and

trust you.

2. Lead with Vision and Confidence

The Logistics of Funding A Deal The difference between selling a Deal and selling Pet Rocks.

3. Know what you offer has value to certain people.

Don’t let the “no’s” keep you from the “yes’s”

4. Let Go of Fears About Asking For Money

So… Why Aren’t YOU Already Using Private Money?


Partner Exercise

What Emotions Come Up For You When It Comes to The Idea or Act of Raising Private Money?


Potential Concerns:-Don’t want to make them uncomfortable-Don’t want to make me uncomfortable!-Afraid to hear “NO”-Don’t want to “Sell” to friends and family


Potential Concerns:-Don’t know what to say-Don’t know how to handle questions-Afraid of the responsibility of handling the money/Afraid of losing the money.

-What else? What is the biggest fear for you?

Busting Through Your Limiting Beliefs

1. The Aladdin Factor – Learning to Ask


1. Ask yourself: “How is this belief serving or protecting me?”

2. Ask yourself: “What Would Happen if I let go of this belief?”

3. Look for Counter-Examples – Cases in which the belief has not been true/right.


Exercise: Think about and write down some times in which OTHER people have asked YOU for money, and you’ve been Okay with it.

•Buying an Investment•Buying a New Car •Buying Girl Scout Cookies•Giving at Church


1) Write down some times in which OTHER people have asked YOU for money, and you’ve been Okay with it.

2) Write down times when you’ve felt great ASKING OTHER PEOPLE for money.


3) Share the Best EXPERIENCE You Ever Had GIVING Money To Someone Else.

4) Share the Best EXPERIENCE You Ever Had ASKING People For Money.

Take-Away:1. Now You’ve Proven To Yourself That There

ARE SOME times which you enjoy being asked for money, and giving money.

2. Now we know that these experiences “EXIST” in the universe, it’s our responsibility to “CREATE” them for the people that you work with when asking for funds.

3. We can feel GREAT or LOUSY when we ask for money. The difference is providing VALUE.


Remember, Asking for Money is About:

• Education – Letting the prospect know “What’s In It For Me”

• Relationships – People want to do business with people that they know, like and trust

• Having a great opportunity that you BELIEVE in.


• It takes GUTS to implement. There is no magic formula.

• The right person will THANK YOU for asking them to be involved!

COME FROM A POSITION OF STRENGTH!


The ABC’s of Any Good Sales Process:

• Building a List

• Screening the List to Find Prospects

• Educating the Prospects

• Closing the Transaction

Building Relationships For Profit and Pleasure

Places to Meet Likely Candidates:

– Real Estate Investor Clubs– Seminars that You Attend– Chamber of Commerce

Meetings– Business Clubs/Networking

Groups (BNI)



– Public Speaking Opportunities *Ahem*

– Running Newspaper Ads/Website Ads

– Joining a Social Club – Tennis, Fitness Center, Country Club



– Talk to people you meet every day: Doctors, Dentists, Gas Station Owner, etc.

– At your workplace– Wherever you already are…

A 5-Step System To Warm-Up Investors To Your Deal

Tell Stories With A Purpose1. Ask Prospects If They Know “Other People” who

may be interested in investing.

2. Get a “shy yes” – “Would You like to be on our mailing list to hear about properties that become available?”

3. Don’t SELL, Instead – EDUCATE

4. Follow Up, Follow Up, Follow Up



• Building a List





1. Give Before You Get

2. Don’t Prejudge People Before Asking

“Say, Joe, from time to time I work with private investors who fund my real estate deals in exchange for a 12-15% return on their money.

“Do you know anyone else who would be interested in investing in a safe real estate project?”

An Instant Test to see if your prospect has money:


5. Keep in Touch• Quick Second Contact.

Contact them again, socially, in the week after you meet – just to say “hi” or give them something of value.

• Regular Social CommunicationPhone/Email them once per month to maintain/build the relationship – when appropriate.


5. Keep in Touch• Automate Follow-Up For Qualified Prospects

Consider adding them to an email auto-responder list “Great, if you’re interested, I’d be happy to add you to my email database so you can keep informed about upcoming opportunities and have ‘first dibs’ when a new property comes along.”


HOMEWORK:• Get business cards from at least 10 fellow

investors who you are committed to following up with about being private investors.

• Don’t just take their business card, create a SPARK of energy – The Seed of a Relationship

• Take Notes About them on the back of the card• Contact them to follow up when you get home.



• Building a List




Educating Your ProspectsLetting People Get To Know You and Your Deal

1. Build Relationships Over Time • Friends and Family already know you• Keeping in touch with prospects in a

meaningful way so that they know, like, and trust you.

No Ulterior Motives!


1. Build Relationships Over Time Follow-up with your email list of interested parties

• Success stories from your other deals• Success stories from other partners/friends• Information about the marketplace : news and

demographics• Lessons you’ve learned, personal insights.


2. Educate Prospects About The Deal!

WARNING: Before you take your deal to investors –

• Feel Confident in the Deal• Have an Attorney Review

• Deal Structures and • Fund Raising/Marketing Plan

• Create Proposed Debt or Equity Structure• Determine if Investors Must Be Accredited


2. Educate Prospects About The Deal!A) Then, Offer Investors Your Great

Opportunity!

• Avoid using “Hype” in marketing• Using a “Tombstone” Ad is a Safer Approach.


2. Educate Prospects About The Deal!A) Then, Offer Investors Your Great Opportunity!

• Offer a short Preliminary Information Summary• Not everyone has money at THIS time to invest.• Not everyone is intrigued by this TYPE of deal• Not everyone wants DETAILS upfront…


2. Educate Prospects About The Deal!A) Then, Offer Investors Your Great

Opportunity!

• BUILD A SUBLIST of prospects who request more information.• Those who request more information are going to

be your best leads to follow up with.


2. Educate Prospects About The Deal!B) Identify Those Who Want More Information

and Follow Up With Them


2. Educate Prospects About The Deal!1. Detailed Information Packet

• Information about Due Diligence You’ve Performed• Conservative “pro-forma” projections• Management Team Summary


2. Educate Prospects About The Deal!1. Detailed Information Packet

• Projected Rates of Return with *Disclaimer* Included

• Photos of the Property• Your commitment (are you putting cash in or

otherwise providing personal guarantees, alternative collateral, etc.)


2. Educate Prospects About The Deal!2. Teleconference Calls

• Invite your leads to group information/Q&A calls• Create “social proof” by showing many are

interested.


2. Educate Prospects About The Deal!2. Teleconference Calls

• Create “scarcity” by suggesting seats are filling quickly

• Technique: Upline the featured speaker• Create “transparency” and build trust by providing

Live Q&A



• Building a List




Closing the TransactionHelping People Make a Decision

1. Commitment• Ask for a decision every time you present

to someone.• If they’re not ready to decide, find out what

else they need to make a decision.• Create a Simple “Next Step” Commitment

Process for people who want to move forward.


2. Follow-Up • Call prospects on the phone to

answer questions and overcome objections.

• Use the Instant Offer System!


1. Create an “Event” • Show progress and social proof• Show Early-Bird Bonuses Getting Used

Up• Provide “reminders” and opportunities to

get information in different formats – read details, talk on the phone, watch a video, have a package mailed to them, etc.


Close the Deal!Lock in the Commitment!– Have the investor send in the funds and paperwork

ASAP to reserve their seat and any bonuses they qualify for.

– Have many ways to send funds: check, wire transfer, etc.


Close the Deal!Make Investors Feel Good About Their Choice– Keep in touch every week or month until the deal

closes – let them know how things are progressing.– Keep them informed as others continue to invest…

shows them they made the right choice.


Close the Deal!Put Investors On Your Fundraising Team– Offer them incentives (referral fees) for

bringing their friends into the deal – Clearly they’re big believers after they’ve invested their money!

How To Use Bad News To Increase Your Investors’ Comfort Level– Be “transparent” and show the truth about

what is going on.– Make adjustments in your OWN rate of return

– put the investors needs first.– Keep the lines of communication open.

Address the primary EMOTION: Fear.


After Closing:– Celebrate Success!

• Contact after closing and let them know things went well.

– Communicate Regularly• Keep in touch quarterly/monthly with management

team updates and payments!• Pay them on time!


After Closing:– Brag About Good News

• Rehab completed – Show pictures• Increased occupancy – show numbers!)

– Address any Bad News Right Away • Let them know what you’re doing to fix the

problem!

Plant the seeds for the next opportunity!

Once your deal has filled up with investors…

• Brag to the rest of your list that it filled up quickly• Let them know you’ll keep them informed about

future opportunities• Tell them they’ll have to act fast next time so

they don’t miss out!

The Logistics of Funding A Deal


• Building a List




The Logistics of Funding A Deal

• Relate, Rate, Educate, and Create!

• This 4-step process will help you create funding for your deals quickly and easily!

Private Investing Works For You and Your Deals!

Remember to Always:

• Treat your investors with respect – better than you would like to be treated.

• Maintain Communications and Follow Up!

• Keep creating new relationships – you never know who your next investors will be!

how_to_get_investors_to_write_the_check.ppt

Documents

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