Millions of people dream of investing in real estate. Real estate appreciates over time, has amazing tax benefits, creates generational wealth, and enables you to make money while you sleep.
But to successfully invest in real estate requires education, hard work, and money.
Ironically, the easiest of the three to obtain is the one that most people get hung up on—money, or lack thereof. I have flipped over 400 houses in the last five years using other people’s money.
Today I’m sharing the top three ways I raise private money to fund my flips and rental properties.
Social media is the greatest brand-building tool available to businesspeople today. If you’re not yet creating content around your business, I implore you to start.
By documenting my own journey of investing in real estate, I have been able to raise millions of dollars in private funding. As a matter of fact, my first deal was funded by two former high school friends who had been following my journey on Facebook.
Don’t be shy. Grab your phone and start posting.
A self-directed IRA gives people power over their retirement funds.
Investors can start a new self-directed IRA or roll over funds from an existing IRA or 401k. The IRA holder can then open up an LLC that the IRA owns. That LLC can have a bank account and be able to invest the funds by simply cutting a check or sending a wire.
Important note: There are rules and legalities you must follow, so please consult your attorney and accountant.
Dog & Pony Shows
If you’re the type of person who enjoys speaking in front of a crowd, the dog and pony show method of raising money could be for you.
Try using a variety of social media, email blasts, word of mouth, and networking partners to put together meetings where you present the investment opportunity.
In the past, I worked with the owner of a networking group. For a small fee, she would organize a lunch at a steakhouse for 12-15 people. I explained my business model for 30-45 minutes, and we had another 30-45 minutes for networking and answering questions. Each event cost me between $250-$400—and I always picked up at least two to three new investors each time.
What happens after you find a lender?
It’s important to note that when I borrow money, I ONLY PAY INTEREST to the lenders. They do not share in the profits of the project. I mention this because many new investors give away too much when negotiating with private lenders. Remember, there are far more people with money looking for a return than people able to generate yield.
Money is the easiest part of investing. The years of hard work it takes to become a seasoned professional that can generate returns is the hard part. Know your worth, get out there and start asking for the money.