Epic Real Estate Investing - How to Raise Private Money | EREI 176

Episode Date: October 12, 2015

You don’t have to wait until you have a 20% down payment or a rock solid credit score to begin financing your investment properties.  In fact, your ability to finance properties is only limited by your own creativity. On today’s episode, Matt explains the ins and outs of raising private money from your network -including why your first goal when raising private money has nothing to do with money at all.  Enjoy! ------- The free course is new and improved!  To access to the two fastest and easiest strategies to a paycheck in real estate, go to FreeRealEstateInvestingCourse.com or text “FreeCourse” to 55678. What interests you most? E ducation P roperties I ncome C oaching Learn more about your ad choices. Visit megaphone.fm/adchoices

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Find Motivated Sellers ASAP.com. This is Terrio Media. Broadcasting from Terrio Studios in Glendale, California. It's time for Epic Real Estate Investing with Matt Terrio. Yeah. Hello. Hello and welcome. Welcome to Epic Real Estate Investing,

the place where I show people how to escape the rat race using real estate. It's really simple. You just got to do one thing one time to shift your focus from making piles of money to making streams of money. Change that one thing just one time and you are on your way to financial freedom. It's not the most exciting path. I promise you that. But it is the fastest. And that is a promise as well.

And then once you get there, life then becomes exciting. And speaking of exciting, I just got back last weekend from Nashville. Yeah, last weekend. Oh, and if you listened to last Monday's episode of this show, my interview with McKenzie Kelly, an Epic Pro Academy member, if you missed that, you definitely want to go back and review that. I remember the conversation that I had with her. I mean, I was obviously there, and it wasn't too long ago.

And I remember it being great, but I listened back to it. And actually, my staff here, when they listened back to it, they said that was one of the better episodes and based on the feedback and the emails that, you know, you think, thought so as well. So if you missed that episode, go back and listen to it. And so anyway, I just got back from Nashville last weekend. And that was my last live event for the foreseeable future. Now, I'll never say never, but there's nothing on the calendar for the rest of this year and beyond into 2016 and on. And I feel a little bit sad about it because I really do enjoy these

events, but, you know, they just take up way too much time to set up. And we've had this conversation. You and I, we've had this conversation in the past. We are not event planners. We are real estate investors. And we just don't have that part of whatever. That's not our business, but we don't even have that part figured out on how to be efficient about that. It just takes up way too much time.

And it's really difficult to generate a profit from them unless, you know, I just stand there on stage and sell stuff. And, you know, that's really kind of the two options is I charge a bunch up front and sell nothing or we charge a little bit up front like everyone else does and sell a bunch of stuff from stage. And you know, that's just something I have no desire to do. I've done it before for other companies, other products and services. But I just, I don't have any desire to do that with my own stuff. I never have because, you know, what I've learned by all those years of doing that is when you're focused on making a profit, when you're focused on conversions, sales conversions from these events, you just, you can't be focused on what I think is most important. You can't be

focused on actually teaching. You can't be focused on actually helping and essentially giving the people what they showed up for, what they signed up for. So until I can figure out how to at least break even doing these events and without, you know, causing any inordinate amount of effort and time for my staff in the organization of them, I'm just not going to do them. Okay. I'll share with you right here for free. And if you want to take that to the next level, the Epic Pro Academy is there for you as well. So that's that.

All right. So it was fun while it lasted and maybe it'll happen again at some point. Maybe I can leverage a couple trips and pile some stuff on top of each other. And we can do something else again. But for right now, all done. All right. So at this mastermind meeting, though, there was a good mix of people,

of varying degrees of experience and success. And a few of the more accomplished investors in the room were stuck. They had a common challenge. They were stuck on how to raise private money. How do they go about it? As they had hit the limit on their own financial resources. They had tapped their own savings or they had tapped their own credit. They'd hit the maximum on what the banks would allow them to borrow.

And they just felt stuck as to how to move to that next level. So I thought I'd take this episode to share with you what I shared with them. And I want you to understand you don't have to wait until you deplete your own finances and credit before you put what I'm going to share with you under practice. In fact, I'd prefer that you don't. And I'd prefer that you start using what I'm about to share with you right now. The stuff that I'm going to share with you on how to raise private money for your deals, I want you to start using that immediately. And we'll get started right after this. Attention, attention.

Shocking website reveals that shocking websites aren't really that shocking. All kidding aside, go to find motivated sellers ASAP.com to get the inside scoop on how the nation's most successful real estate investors really find their deeply discounted properties. Go to find motivated sellers ASAP.com. Deeper discounts, less secrets. Find motivated sellers ASAP.com. This is your business and you're doing well. Or you see how you can do well. But if you only had access.

to more funds, you could do even better, perhaps even knock the ball out the park and create your own financial freedom so much faster than how you're going about it right now. But you just don't know where to find the private money and or you don't know how to ask for it. And or you lack the confidence to ask for it. Even if you did know how to ask for it, you lack the confidence to ask for it because you're afraid that your experience is going to show through or your lack of experience is going to show through and you're going to end up looking like a newbie and you don't want that.

So you're a little bit nervous and scared on how to go about it. Or maybe it's all of the above. Maybe it's everything that I mentioned and you're concerned. Maybe a little bit or a lot. Or maybe you're downright worried or even scared that you're never going to create the type of financial freedom and independence that you've envisioned when you got started. I mean, what would your business look like if none of that wasn't even an issue for you? Pretty cool.

So let's go over it. Let's go over where to find the money, how to ask for it with confidence, and how to never run out of it, so that you can get your business moving forward at its full potential. Sound good? All right. Now, as I've shared here once or twice, I got started with very little disposable cash and a devastated credit score to go with it. And I was certain that these things, these same concerns that you have would be huge barriers for my success. I didn't have the money, don't have the credit.

How is this going to work? This is real estate. You need money to do this. And in fact, it was because of my specific situation, I hesitated. And I procrastinated in taking the leap from real estate agent to real estate investor. I was actually probably a real estate agent six to eight months, maybe even almost a year longer than I really. really wanted to be, like when I had made my mind up what I was going to do, but I just could not make that commitment because of that, because of the lack of the money, lack of the credit.

So if you're feeling like you're a bit handicapped because you don't have the money you think you need or you don't have the credit score that you think you need, I can relate. And you know what? Even if you do have the money and even if you do have a good credit score, you want to pay attention to this today because I'd rather you operate from this person. perspective that I'm going to share with you, then use up your own resources first. So my mentor, my very first mentor in real estate, told me not to worry about the money. That was the easy part. And I would, I just remember like the easy part.

How can that be the easy part? So just trust me. That is the easy part. Travel as far as you can see. And when you get there, you'll see further. I think I've said that here once or twice before as well. So without many options, because I didn't have any, because I didn't have the money or credit, so I couldn't be concerned with it anyway.

I did exactly what he told me to do. I went out and found a deal. And I said, I found a deal. He says, now go put it under contract. So I went and put it under contract. Then I came back to him and I said, okay, I got this deal under contract. Now what? Then he told me to calculate the projected profit and then decide how much of that, the profit,

you would be willing to trade for the use of someone else's money to do the deal. So I did that little calculation. Okay, I'd be willing to give this amount up if someone else paid for the whole thing. And then he said, now just start asking people if they'd make that trade. So I did. And you know what? I only had to ask two people before I found a taker. Finding the money was indeed the easiest part of that whole process.

And when I told my mentor that I found the money, he said, see I told you and and here's where all really came together he pointed out to me that what I did was in no way different than how you would get money from the bank you know first when when you go to a bank for a loan at most all they're going to give you is a pre-qualification letter they're not going to give you the money no you're going to get nothing more than that pre-qualification letter until you actually identify a property and you actually get it under contract. Now the conversation gets serious. Now we can start talking. Then they'll give you an actual approval, right? But not until you got the deal under contract. Like escrow doesn't start until there's

a signed agreement between a buyer and a seller. So they won't give you the actual approval until then. But even then, their approval is contingent on the property that you have under contract actually being a deal. That's why they send out an appraiser to confirm that what you got there is actually worth the money that they're going to lend to you for it. They want to see equity in the deal even.

They want to see some security. And if they don't see any equity there, you know what? They're going to ask you, the borrower, to come in with the difference, to put that money down is a down payment until there is enough equity that protects them from loaning you

the amount of money that you're asking for. And, you know, when my mentor broke it down to me like that, I instantly saw the similarities. I mean, I put two and two together rather quickly. I couldn't find any private money until I first had a deal under contract. And second, not until I was able to show how much equity there was in the deal for the private money partner. That trade, when I was trading equity for the use of their money. same thing as a bank

so why do people think it's so different why do people think they need to go find the money before they can do a deal whether you go to the bank private money hard money wherever you go to find your funds you know unless you got a rich uncle joe or something no one's going to give you the money until you got the deal so in a nutshell find the deal first and get it under contract second make sure it's actually a deal

do those two things and private money is easy to find. And if you can't find it that way, you're not going to find it any other way. I mean, unless you have that Uncle Joe, or maybe you get lucky and you stumble across some dumb money that doesn't know any better. But that won't be a strategy that you can leverage for long term. So maybe you will get lucky and you can say, see, Matt, I got the money before the deal. Ha, ha, okay, you got me. But do it again and again and make that a long term strategy.

It's not going to happen. And you see, when you do it this way, when you find the deal first, you get under contract, you don't look like a newbie because you got a deal and you've got a piece of paper that says you've got control of that deal. Now you can ask for money, or how I like to put it, you can offer an opportunity to a private party with confidence. And here's why that happens. When you ask for a loan from somebody, anybody, they've got three questions running in their head,

through their head. Whether they ask you these questions straight out or not, they've got these three questions running through their head. They're thinking, okay, how much money am I going to get back for this deal? And then the second question is, when am I getting it back? And the third thing is, what happens if I don't get it back? Those are the three things that they're wondering. So to add private money to your investing toolbox, you have to be able to answer those three questions with confidence and clarity. And you've got to be able to do that. You've got to be able to do that every single time. And the only way that you can answer those questions with any sort of confidence and clarity is when you actually have control of a deal. I can't tell you how much money

you're going to get back if I don't even have a deal to show you. I don't know when you're going to get it back because I haven't even got the deal yet. And you know what happens if I don't give you the money back? I guess you just have to wait around for me until I can figure it out. Those are your answers to the questions before you have the deal under contract. Once you got under contract, the answer those questions are very different. You can say, hey, look, here's the equity, and this is how much I'm going to get, and is how much you're going to get for putting your money in here. And this deal, this should be done, closed by this point, and then resold at this point,

and we'll split the profit then. And what happens if you don't? Well, I've got, I bought the deal low enough. I got a good enough deal under contract, or I bought it low enough. I got enough equity in the contract that, you know what? We'll just fire it up and do it again. Or maybe we rent it out. or maybe we just come up with a plan B,

or maybe we just have to go to another buyer. Because as you can see, we'll probably have a line of people ready to buy this property from us. Those are the types of answers you can give when you have the property under contract. But unless you have the property under contract, you can't give those answers at all. So first, find the deal, get it under contract.

Second, make sure it's actually a deal. Do those two things, and private money will be very easy for you to find. And if you can't find it that way, you're not going to find it any other way. So that's where the confidence comes. from a natural and genuine place. That's what control of a deal gives you.

Confidence. Now, how do you ask for it? Good question. I'm sure there are many ways to do this. But I know only one way. And the reason I know only one way, because it works so well that I've never had to experiment with any other way. And I've got these three specific money-raising questions.

Number one, Mr. Potential Private Money Letter, would you be open to an 8% return on your money? That's question number one. Would you be open to an 8% return on your money? Now, if that could be 6%, it could be 9%, 15%, 20%, it could be 3%. It depends on your deal and how much you can afford to offer. But when you offer that amount, offer a little bit less than what you're willing to give. And there's two reasons for that. One, it could leave you some room for potential negotiation.

Second, if not that, it leaves you room to over-deliver. And I'll explain to you why that's important to admit. So that's question number one. Would you be open to an 8% return on your money? Or would you be open to a blank, fill in the blank percent return on your money? Number two, how much would you have available for that type of investment? Okay, it's very hypothetical. How much would you have available for that type of investment?

And they're going to tell you, 50,000, 100,000, a million bucks, 10 million bucks, whatever it may be. And when they answer that question, there should be no emotion on your face. It should be, you should have this presence of that, I do this every day, it's no big deal. I mean, if they say 50,000 and you need 500,000,

there should be no response. Don't have this disappointed face, this disappointed look on your face. Because there may be another deal down the road where you can use that 50,000. Or if they say, five million and you only need 500,000, don't get all excited and cheesing because now you got access to five million bucks. No, don't do that. You do this every single day of your life. It's no big

deal. So that's question number two. How much would you have available for that type of investment? Question number three is, if I come across that type of investment, would it make sense to give you a call to discuss? That's it. I like to even throw something in the beginning. There's You know what, I'm working on some stuff. I don't have anything solid yet, but should I come across that type of investment, should it come through, would it make sense for you and I to sit down and talk about it? That's how you ask. You don't actually ask for the money.

You ask for permission at some point in time in the future to talk about the money. So that's how you ask. You don't ask for the money. you ask for permission to talk about the money at some point in the future. You just ask for permission to give them a call. You ask for permission to sit down over coffee and talk about your deal, to talk about your opportunity. Okay, so now you go get that deal under contract.

You ring, ring, hey, remember that thing I was telling you about? It's that thing I was asking you about 8%. Well, it's actually a little bit better than that. It's going to produce about 9% probably. Would it make sense for us to get together still? okay so there you go now you set your appointment so you're really just asking for permission to set the appointment with those first three questions now here's how you secure those funds here you you go ahead at that meeting at that appointment at that little you know get together over coffee

you share your deal and you answer the three questions inside the private money person's head this is how much you're going to get back and when i like to always show there that you're going you're going to get at least like 1% more than what you had previously mentioned. Because likely, when you ask a question like, would you be open to an 8% return your money? There's very few people that would say no to that. Okay, 8% is a very good return these days. And so when you, between that time when they answered that question and this time where you're sitting down and actually talking about it, there's a little bit, even though 8% is still a great rate,

it's still because of the time that's lapsed between when you ask that question and when you're sitting down now to talk about the deal might have maybe lost a little bit of the enthusiasm, the context has changed,

the emotions might have dropped a little bit. So I would like to say, this is how much you're going to get back. You're going to get a 9% return on your money. And boom, that elevates the interest all over again. The eyebrows go up and you've got their attention. All right.

So that's how I like to present my opportunities to people. Then I show them this is when you're going to get it. You got to answer that question. So, for example, it's like, well, this is the property. It needs this many repairs. And I've got the contractor in line. And he says it's going to take four to six weeks. But you know contractors.

Let's plan on eight to ten weeks. So I'd say worst case scenario, you're going to get your money back in 12 weeks. So you're totally under delivering, right? Or under promising. Setting yourself up to over-deliver. So if you think you can get this done in four weeks, let them know 12. Okay? this is when you're going to get it.

And then number three, that third question, should this not pan out, how, then what? How am I going to get my money back? That's the question in the head, right? So there you show how their money is safe. You see, I've purchased this property low enough. I purchased it with enough equity in place because if you look at properties just like this one in the exact same neighborhood, this is what they're actually selling for after they're all fixed up.

So you can see how much room we have for error here. And I'm pretty darn confident that there's going to be a bidding more. for this property. So even if we have one person in place and they fall through, we're going to have two, three, four people lined up and backup position. That's how your money is safe. Okay? So that's how you secure those funds.

That's how you present those funds. You want to make sure that you answer those three questions during your presentation when you're sharing the deal. And you don't need a PowerPoint presentation. You don't need a flip chart. You don't need a folder with laminated pages and all kinds of graphs and everything like that. It can be very simple and very casual. Okay, just bring, bring some information about the property, maybe some information about the market,

and it could just be on a bunch of different pieces of paper. They're like, you don't need any formal presentation to make this happen. So that's how you present it. And now, here's how you keep the money coming in. This is how you keep a constant steady flow so the private money never runs out. Simple. Do it you said you're going to do. And do it when you keep.

You said you're going to do it and over-deliver. So we asked if they were open for 8%. We showed them in the presentation how they're probably going to get 9%. Give them 10%. And we showed them how they're going to get 9% in 12 weeks. You give them 9% in 6 weeks. Give them 9% in 8 weeks. Call them up again and say, hey, you know, that deal just closed.

and I've got something for you. You want to grab another cup of coffee? And there's your time. You called them not asking for something. Now you call them to give them something. And you're given them more than what you said you're going to give them. Do that. Operate that way.

And private money will never, ever be an issue for you. Because you know what? You're going to show up at that second coffee meeting. You're going to give them that check. And they're going to give it right back to you and say, go do it again. They will. trust me try it they will i promise you all righty you know why they do that is because nobody operates that way nobody actually follows through it's so rare and it's tragic that it's so rare that people

actually do what they say they're going to do and if they actually do what they said they're going to do it and they actually over deliver they do more than what they said they're going to do that is such a rare find and if you can operate that way they won't want to want to give their money to anyone else but you. How do I know this? It's how I built my business. It's exactly how I built my business. Someone asked me the other day,

I did a survey inside of the private Facebook group for the Epic Pro Academy, and I said, I'm going to be doing some trainings over the next few months through October, November, and December. I'm going to be doing some webinars. What do you want to learn about? And that was one of the questions, was how did you build what you built with no money and credit? I'd like you to go over that as many times as you possibly can.

And I will. I'm going to do that. So stay tuned. I'll definitely share those with you. They're going to be absolutely free. And there'll be nothing for sale in those events. They'll be straight training. And I'm going to share that with you.

But that's what they want to know. And that's what I'm going to do. Okay? So that's one of the things I'm very much going to deliver. What's next? There's one more thing we had to get this. Oh, who do you ask? Right?

So we've got how to ask, how to ask, then how to ask with confidence. Now, who do you actually ask? All right. So here's the two places you want to look at. Start with the people that you know. And preferably the people that you know that actually like you. Okay? Those are the people who want to know.

Or those people you want to talk to first. And if you run out of those people, like all of my friends are broke. I don't have anybody or, you know, everyone. I've messed up so many other times in my life. There's no way that any of my friends or family would trust me with something like this. If you run out of those people, I understand. So the next spot is to visit your local. Rea Group.

And during the needs and wants section of the meeting, the part of the meeting where you actually get to stand up in front of the room with a microphone and tell people what you're looking for and what you have to offer. And you're going to show your deal. And I want you to share your deal in very much the same manner that you would have on that first coffee meeting. You want to make sure when you stand up in front of the room, you're going to answer those three questions.

This is how much money you're getting back. This is when you're getting it back. and should it not pan out, this is how your money is safe. Okay? So you can do that, stand up in front of the rear group, and I actually think that's the best way to do it.

I've raised a lot of money that way, and the reason that's the best way is because you could go to each and every one of those people one by one during the networking time, during the coffee and donuts time, and, you know, work your way through that crowd one at a time. That's not a very efficient way of going about it, but when you can stand up in front of a room,

whether you've got 50 or 500 people in your group, You know, still, there's probably only going to be a handful of people that you even catch their attention. So you share them with that deal and you say, okay, I'm going to be here until the end. If you want more information, meet me in the back. Give them a call to action to meet you in the back of the room. And those four or five people out of the 500 people that are there or out of the 50 people that are there, those are the only ones that are going to come back and talk to you. Now, if neither of those don't work for you. So if, you know, you're in the NFL club, you've got no friends left.

no family left if you're in that club and the RIA group no one stood up and walked back to with their checkbook open so what do you do now if neither of those work guess what you don't have a deal no you don't have a deal so go find another deal get it under contract and repeat the process it's that simple so here's what's to do here's what I want you to do I want to write this down first first thing starting right now forget about the money forget it

take your focus off the money that you're going to need take your focus off of that entirely forget it you don't need the money to find a deal you don't need the money to put a deal under contract don't worry about it

until you get to the point where you're actually going to need it take steps one and two before you start worrying about step 10 because you're never going to get get to 10 until you take step one and two anyway. So that's first thing. Forget about the money. Second, place your focus solely on finding the deal, an actual deal. And once you find it, get it under contract. Even if it's not a great price, get it in the ballpark. You can always renegotiate. Get control of it. That's the secret to this whole thing. Find the deal and get

control of it. Third thing, I want you to go share your opportunity, share your needs. Share your newly found opportunity, your legitimate opportunity with those that you know and those at your RIA meetings, if you even need to go that far. And if you indeed have an actual deal, you're not going to have to ask more than a few people. I promise. I swear, it really is that simple. Yes, it is that simple. You know, with savings accounts today, money market accounts and CDs offering less than one percent? I mean, it's like 0.6, 7 percent or something like that. That's what savings accounts are advertising in the Sunday paper.

This is the deal. This is the best rate in town. Come park your money with our bank. With those types of conditions in our market with regard to interest rates of what the banks are offering, it will take you no extraordinary effort to find five, six, or seven percent money for your deal, maybe even less. and someone's got all their money parked in a 1% CD and you offer them three.

Isn't that three times what they're making? It is, isn't it? Contrary to popular belief, a lack of funding is not the biggest barrier to starting a business. It's excuses. But don't let a lack of funding be your excuse. We are epic fast funding

and we'd like to fund your business with up to $150,000 in revolving credit lines. If you've got 60 seconds and a solid credit score, You could have access to your funds in as little as seven days. Go to Epicfastfunding.com to fill out our 60-second application. It's fast, it's simple, up to $150,000 in as little as seven days. Go to Epicfastfunding.com. There are two steps to wealth.

First, stop doing what poor people do. Second, start doing what wealthy people do. The wealthiest people do. Do what they do best and delegate the rest. If only you had the time and resources to do it. Now you do. We're VAs for Real Estate.com, and we have some free information for you. Get the five-step shortcut to hiring a rock star virtual assistant that will make you millions.

Go to VAs for Real Estate.com. Stop doing what poor people do and do what wealthy people do. VAs for real estate.com. That's it for today. I'll see you next week. I'm Matt Terrio, living the dream. You've been listening to Epic Real Estate Investing, the world's foremost authority on separating the facts from the BS in real estate investing education.

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