(NOTE: What it's like to write a $1,000,000 check for a sweet piece of undervalued real estate … even if your bank account is overdrawn and you owe the local lawn boy $20? This special report shows you step-by-step.)
From Patrick Riddle, Deal Funding Adviser...
To easily get private money, you need to be asking the right questions...
...questions that elicit motivation, questions that uncover goals, questions that make the prospect imagine themselves enjoying and benefiting from your investment opportunities. Then, you can use the information you gather to effectively “sell” your prospect.
Are You Asking The “Right” Questions?
Here are 5 important questions you should be asking your private lending prospects. And just a quick tip… make sure to write down everything a prospect tells you when you’re going through these questions… this is valuable info!
1) "What have your investing experiences been thus far?"
Find out if they are or have invested in CDs, mutual funds, bonds, stocks, real estate, race horses, or gold. This will help you get a good picture of the type of investor you’re dealing with, their expectations, how knowledgeable they are with investments, etc.
If they have any experience investing in real estate, you want to know the details. What did they like? What did they dislike?
The prospect’s answer will indicate whether they primarily move away from pain (losing money or earning meager returns) or towards pleasure (making more money/better returns/financial freedom). Note whether they move away from pain or towards pleasure, then present any investment opportunities to them through the lense of this information.
2) "Are you happy with the performance of your investments (investment portfolio)?"
Whether they are happy with it or not, you ask the same question next . . . “What average rate of return have you been getting from your investments?”
At this point, if they tell you a 20% annualized return, you can let them know it was nice talking with them and move onto the next prospect. You just saved yourself some time.
Let’s say the prospect said he or she is earning a 6% return on x-investment. At the end of your presentation, you could say something like, “Well, I’m not sure if we can do this or not but . . . what if we could offer you a 8% annualized return backed by real estate . . . would that be something that might work for you?”
3) "Whether or not our opportunities are a fit, how important is timing? Do you need to find the right investment opportunity soon?"
If they say “no,” this may be a good person to add to your follow up list. You could also say something like this to them, “So if the money stayed in x-investment earning x% for say another 6 to 12 months, you would be fine with that?” Or, “If your money just sits there earning you nothing for x-time, you’re ok with that?”
If they say it’s important to find an investment soon, you have a green light to continue moving forward towards turning them into a private lender.
4) "Are you more interested in making a quick buck or building wealth?"
This is another way of asking if the prospect is interested in a short or long-term investment. We would prefer that the person invest long term. So by saying “quick buck,” we’re putting a negative connotation around that idea. The longer term you can negotiate, the better.
If you find out the prospect just wants to make a quick buck, it may be best to move on.
5) "Specifically what would the right investment provide for you?"
This question is key to get the prospect visualizing a positive experience with your investment opportunity.
Get your prospect to imagine retiring one day with complete financial security, going on that dream family vacation, feeling safe and secure… and your prospect will associate those feelings with your investment opportunities.
Getting private money is all about asking the “right” questions. So ask ‘em and keep your mouth shut! The more you learn about your prospect, the better the chance of converting them into a private money lender.
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Incorporate these questions into your private money pitch. Whether you use PowerPoint, a flip chart, or a hodgepodgs of sticky notes (hope note), write these questions down, so you don't forget them when you need them.
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Take notes of the anwers you get.
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Posture your opportunity and/or your deals in a way that matches their wants and needs.
Patrick Riddle
has been investing in real estate ever since he got the bug in college at Clemson University and - to his parents dismay - dropped out of college to dive full-time into real estate at the age of 22 with a couple friends/partners from school.
The first few deals were rough for them, mainly using their own cash, credit, and hard money loans. But, soon he found out that was a rough and unsustainable way to build a real estate business.
After "on the job" learning through the school of hard knocks at first, he found the key that helped their company get deals done more quickly, with higher profit, less risk, without having to go to banks or use their own cash.
Fast forward to today, their company has closed over 130 real estate transactions and has put over $6 million in private money into their own transactions.