- But unfortunately, the thing that keeps holding you back is not being able to answer the question “How do I come up with the money to start investing?” The inability to answer this question can literally be the paralyzing factor in moving forward with real estate investment. After all, let's face it, it's not like were talking about buying a McDonald's happy meal here. When investing in real estate you're investing in a big-ticket venture. And you’ve convinced yourself that you just don't have the money to do it. But, what if we told you that you do have options, with private money being one of them?
Make no mistake, acquiring private funding will involve just as much pre-qualification as a traditional mortgage. However the difference is that a bank is lending based, focusing on the numbers first and foremost, while a private investor is funding your deals based on their trust and confidence in you and your business. So, before you just jump headfirst into the world of private funding, it would be wise to take a few steps to ensure you give yourself the best possible chance of securing the money.
- In this article, we will highlight four different ways you can prepare to enter the world of private money.
1.Use Your Own Cash First
There is nothing more satisfying than when you can deliver in business based on your own efforts. But, if you don’t have enough hard cash to start, make the commitment to yourself that investing in real estate is your primary goal. Then, put on your big boy (or girl) pants and start getting frugal and save money. Not only is learning how to save a good habit, but it is key to your personal financial success, as well as your business success. Once you saved enough money, the determination to invest with your own capital will inspire you to be conservative about your first investment. It forces you to think about every single dollar you spend on the project, how to utilize special tools in the industry (i.e. multifamily leasing technology), and how you can avoid failure.
2.Become Good At The Details
Accurate documentation is critical in real estate if you want a successful business. Therefore, you need to start recording all of the details of the purchase, the rehab, and the sale. Do not undervalue the power of a spreadsheet and a camera. If you document every detail it will give you a reference point for future projects and can serve as a foundation for establishing yourself as a safe investment to all of the private moneylenders in the real estate industry.
Once you start to make some money and have a few successful deals under your belt, now is the time to showcase what you've done and accomplished on social media channels. This will be a great networking opportunity for you, and can help draw the attention of moneylenders that may help you in the future. Also, take the time to go to every networking opportunity that comes your way. Whether this is a simple business association, an investment club, or a regional or national conference, make sure you get involved. Once you've found your niche, network your tail off. While keeping a level of humility, show others how you are a successful real estate investor. Show them you now the ins and outs of real estate, and that you even know how to utilize tools such as Multifamily Leasing Technology. Once people know who you are and what you do, they will reach out to you to offer joint ventures, partnerships, hard money, and much more.
4.Always Do the Right Thing
No matter how hard you try and no matter how much effort you put in, at some point the inevitable is going to happen. One day, you'll wake up and realize, you made a bad deal. And it's okay, it happens. Success in real estate is not based on a single deal, but rather many deals over time. And you'll have to go through a couple failures and lose money in order to find the best system. However, once this does happen, you need to make sure you have a plan in place for paying it back. This is the best way to build trust with your lending partners and will ensure that you have a long-lasting, stress-free partnership.