It’s Private Money Season!

Editor’s Note: Dennis Fassett is a former corporate finance executive turned real estate investing “Cash Flow Mercenary.” Dennis specializes in single-family and multi-family cash flow properties and thoroughly enjoys assisting his fellow investors with their own strategies, including how to buy your first apartment building.

As an ongoing contributor to Mogul’s “Market News Updates,” Mr. Fassett provides us with his own unique, lively, and thought-provoking commentary on the timely industry news and events of today that are impacting our industry. And be sure to check out his other super-helpful Market News Updates. For now, enjoy...

From Dennis Fassett, Cash Flow Mercenary...

This is something I write about every year around this time. (It’s a bit later than usual, because my buddy Frank didn’t have his Halloween party this year for the first time in 13 years. His wife’s mother died the week before and there was too much going on with the funeral.)

The reason I write it every year is to remind you to focus on it – and make progress in your business – even as the real estate market goes into hibernation through the holidays in many markets across the country.

I figured this out back in 2008 at Frank’s party…

He has an outdoor Halloween party every year, and initially, the idea was that we would take our kids around the neighborhood trick or treating, then after, we’d drop them off at home while we headed over to his house for cigars and adult beverages.

Well, in ’08, the party was huge because it wasn’t on a school night and it quickly grew to over 100 people. Of course the dads were all sitting together in one area and the moms were in another.

It happened that in the couple of months prior, I had told another good friend about the area I was buying rentals in, and walked him through some of the properties that were on the market.

Because we were in the middle of the crash, prices were spectacular, and because of the school district it was in, I was having a lot of success attracting awesome tenants.

So my friend had closed on one property in my area just prior to Halloween – so what do you think he wanted to talk about?

Yep. Real estate.

So there we were…

In the midst of 50+ dads talking about how great the rentals were in that neighborhood.

And dads being dads, a lot of them gathered around to listen in on what we were talking about. They asked a lot of questions, and we ended up talking about it for 45 minutes with the rest of the dads crowding in to listen.

play One neighbor in particular paid very close attention, and as the party was breaking up, he pulled me aside and asked me to call him about funding some new rentals for me.

Since everyone was drinking pretty heavily (we all walked over to Frank’s), I blew it off and never called him because I figured he was just blowing smoke.

But sure enough, 10 days later he asked if I’d found a house yet because he wanted to move forward on loaning me money.

So I blew him off a second time…

A week later he called me and asked if we were going to do it or not, because he had already put the money aside. I said yes, and 3 weeks later he funded his first rental for me.

The crazy thing was…

I never asked him for money. I didn’t even bring it up to him. All I had done was talk about what I was doing in my business and he ended up chasing me down.

So I decided to focus on that approach – not asking for money – to see how it would work.

What I found was that the time between Thanksgiving and New Year’s Day is prime time for private money seed planting.

Everyone is relaxed, their guard is down. They’re drinking, they’re reconnecting and they’re chatting about anything but work.

So I started casually talking about real estate with everyone. And they asked questions. And that led to more questions and so on. The key was I never dumped it on them when they asked a basic question. I told them a little to pique their interest, and if they were interested, they asked more questions.

And with a lot of them, the questions usually got around to how I was funding my deals.

I even did it at my day job at a Christmas potluck. And shortly after, one of my co workers became another one of my private lenders.

money All in all, over the next two years I raised over $1.6 million in private money using that approach. And through it all, I never asked a single person for money.

Not one.

Pretty amazing.

So, I recommend you try this starting this year…

Prepare a 30-second description on what you’re doing in real estate. Be ready to answer questions. And most importantly – don’t jump down people’s throats about it… and never, ever ask for money.

The people who are interested will keep asking questions. And the ones who have money to lend will offer it if they have confidence in you and what you can do.

Give it a try!