3 Tips for Raising Private Money for Real Estate

The number one question new real estate investors have is, “How do I raise enough capital for my first deal?” Well, we have some raising private money tips…

Raising money, especially through banks, has become increasingly difficult. This is because not everyone can satisfy the long list of requirements to get qualified for a loan. As a result, other options such as private money have proven to be more viable for investors.

However, raising private money is not a walk in the park…

There are many steps and technique you need to implement in order to get funding. In case you didn’t see it, we have an article on how you can Raise private money for house flipping. With that being said, knowing the basics is simply not enough. Let’s take a look at 3 raising private money tips for increasing your chance of getting a private money loan.

raising private money tips

It’s All About Building Relationships

raising private money tips

Contrary to beliefs, the most important thing when raising private money is not data or numbers, it’s building a good relationship. The better the relationship between you and the lender, the more comfortable your lender will become. Which means your chance of getting a loan will increase.

Essentially building relationships boil down to 2 things:

  1. Making the lenders feel comfortable in working with you
  2. Having the ability to relate to the lenders

#1 Be Trustworthy

To build a relationship with your lender, first you need to be trustworthy. Being trustworthy is more than just showing off your numbers and statistics. It’s about your attitude, your character, your communication skills, and how good you are at presenting yourself.

To appear trustworthy, you need to live up to your commitments. Which mean that you will do what you say you’ll do. How can a lender trust you with their money, if you can’t even show up on time for an appointment?

You’ll also need to know your numbers and present it in a clear and convincing matter. Be ready to answer any question that the lender might have. A lender needs to feel comfortable in your knowledge and skills, too.

It’s okay that you might get a higher rate and a low capital the first few times. Just keep focusing on being a trustworthy partner and more money will come later.

#2 Know What to Look For In a Lender

When raising private money, it’s not always about what you want out of a lender. It’s also about what the lender is looking for in your deal. People want to be understood, so start the conversation by asking questions and listening closely. Once you understand what they want, you can then build the relationship by meeting those needs. In addition, it’s easier to screen out potential lenders than wasting time before you find out that they are not a good fit for you.

Some of the questions to ask the lenders include:

  • What are your private money lender terms?
  • What length of loans do you finance?
  • Can you tell me about your experience?

#3 Have a Credibility Kit

raising private money tips

A credibility kit is a marketing brochure that lists all of your qualifications as an investor. This serves the same purpose as a resume for a job interview. A credibility kit set you apart from your competitors as it creates a good impression in the lenders’ eyes.

Some of the things you need to have in your credibility kit include:

  • Your personal story
  • Degrees and certifications
  • Credit report
  • Important legal documents
  • Projects you have done in the past

Raising Private Money Tips // Putting in The Work

There you go! Those are the 3 tips that can help you increase your chance of getting a private money loan. Now that you have the knowledge required, it’s time to apply those on the field. Raising private money demands your dedication and hard work.

If you need some extra help, head over to PrivateMoneyGoldmine.com and sign up an account. The site helps you find hundreds of new private money lenders in your area, so you don’t have to waste time looking through endless lists by yourself.

raising private money tips

By Doug Smith
Founder of MyHouseDeals, Doug’s investing success allowed him to network with some of the greatest minds in business, and he’s been able to give back by sharing his investing knowledge to aspiring investors. To date, his investing tips and articles have been read by hundreds of thousands of investors. Although an active investor, Doug is most proud that he’s been able to transform people's lives by giving them life-changing advice and access to highly profitable investment opportunities through MyHouseDeals. And that this information has empowered them to make hundreds of thousands of dollars, quit their jobs, and most importantly, enjoy their lives with their friends and family. When he’s not investing in real estate, Doug enjoys traveling, softball, disc golf, and playing the guitar.

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