Advice for looking for private funds?

Question

Hello BP,

I'm wondering if anyone has any tips for sourcing private funds. I have significant experience between being a licensed agent, experienced flipper (30+ 100k rehab budget flips), and experienced wholesaler (50+ transactions). However, I have all of my funds tied up in a passive rental portfolio. I am house rich and cash poor, so I rely a lot of creative finance strategies. I realize that liquid funds are one of my biggest obstacles to doing more business and I'm curious to know how others have raised funds. I'm not interested in talking with my circle as I fear this could make things awkward and I'd rather not talk money. Does anyone have any tips or ideas to suggest? Thanks for the time to respond! Much appreciated.

Ryan

Timothy Douglas · Answer

https://www.biggerpockets.com/forums/93/topics/54108-buyer-s-list-how-to-

I know you're experienced and all this talks about is a buyer's list for wholesaling, but these are the same people that would have the liquid funds. From what I know, which is very little, the best thing to do when you're missing something is to partner with somebody who has it. So either raise the funds from people who have access to cash, partner with them, start selling off your portfolio, or do some 1031 exchanges into bigger properties that will cash flow more. The Raising Private Capital book in the bookstore might help you out with other creative solutions. Also, I doubt you've made it this far by acting out of fear. Awkwardness and overcoming fear is the key to growth! It's not a valid reason to not do something if you truly want to grow. Go ahead and talk to your circle, their circles, and random circles about money and growing together! It can help a lot and definitely won't cripple you. This isn't a call out, just a recognition of who you are! Don't let fear hold you back!

Tyler Jahnke · Answer

Hey @Ryan Rush - my advice will be VERY simple. And obvious. But it's true. And you already have the tools to succeed here seeing as you're a licensed agent and I assume you already use these strategies.

Diligently, intentionally, and consistently NETWORK.

Go to meetups or HOST your own. Connect with people here on BP and schedule phone calls with them. Join real estate investing Facebook groups. Take local investors to coffee. Build that network and if you prove yourself to be a reputable and trusted individual, money will find it's way to you.

I also think @Timothy Douglas hit the nail on the head regarding your comment on fear. Talk to your inner circle and as long as you're presenting a deal you truly believe in that you can execute, there really shouldn't be any fear. You're not trying to convince anyone to invest with you, you're simply presenting an opportunity. They'll make the decision on whether to invest or not.

Best of luck! Happy New Year! Let's make 2020 amazing.

-Tyler

Alina Trigub · Answer

@Ryan Rush

I know I will sound like a broker record, but I will repeat what @Timothy Douglas already said to you, NETWORK, NETWORK, and NETWORK!

So, you said, you don't want to talk to your inner circle. That's fine. You can start with the outsiders, but realize that it will slow you down. People typically invest in other people they know and trust. And who would know you better than your friends and family?! Again, you can totally skip this group, but it will take longer. So if the latter is your choice, then join REI groups found through BP and Meetup sites and start networking with folks there. I'm sure you will find plenty of capital.

Also, start talking to everyone you meet about what you do and allow people to ask questions. When there is no hard sell and you're just sharing your story, people feel a lot more at ease to ask questions and get interested especially if you offer them to make money on the side.

Here're a few more guiding posts for you:

https://www.biggerpockets.com/member-blogs/10850/85351-nothing-will-work-until-you-do-maya-angelou https://www.biggerpockets.com/member-blogs/10850/86199-how-to-find-wealthy-investorshttps://www.biggerpockets.com/member-blogs/10850/84894-where-can-i-find-investors

Feel free to PM me if you need more help.

My best!

John Fortes · Answer

Raising capital starts with your inner circle. People invest with people first then the deal second. You have the tools and background so think of it this way, if your friend had the opportunity and the background that you have would you listen to what they had to say?

Happy investing!

Hart Pearson · Answer

@Shiloh Lundahl I'm curious Shiloh... why the 12% notes in second position vs. a washout refi to replace the 1st position? More cash up to a higher LTV? Easier process I'm sure, just seems pricey.

Hart Pearson · Answer

https://www.biggerpockets.com/... I'm curious Shiloh... why the 12% notes in second position vs. a washout refi to replace the 1st position? More cash up to a higher LTV? Easier process I'm sure, just seems pricey.

Shiloh Lundahl · Answer

@Ryan Rush What I share may make you uncomfortable.  But this is what I did.  I started talking with people about what I was doing and the successes I was having.  Many friends and family didn't know how to respond to the successes I was having so I stopped talking with them about my successes because I saw that it was making them feel uncomfortable.  Then I started sharing on BiggerPockets about my successes.  I reached out to people and took them to lunch to network. I also had people reach out to me to go to lunch.  I would explain the deals we were doing and how we were doing  them.  Then I started to hold meetups in my area where we went over the deals we were currently doing and I would share at the end lending opportunities that were available for people to lend on if they wanted to.  That is what really helped us raise money for deals.  We also sold 2nd position performing notes at 12% interest on properties that we had a lot of equity in.  This allowed us to pull some money out of properties that were cash flowing nicely but had a lot of equity in them.  After doing this for about a year, I was invited onto the BiggerPockets podcast and from there I have had many people reach out to me wanting to learn about investing that are willing to lend on our properties in order to get onto our WhatsApp investing group so they can learn.

Advice for looking for private funds?

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