Don't Judge a Private Investor By Their Cover

[William Carson]

I am new to real estate investing. It has been something that I've wanted to do for years, back to the Carlton Sheets days of infomercials. If I knew then what I know now...

When I was in the networking phase of starting up the business, I learned quite a bit about hard money lending. I jumped into a deal a little too early, I hadn't found any private investors at that point. So there I am, contract in, no funding. I scrambled and called every institutional lender I could find for a single family home in rural PA. Shocking. I had a little money, enough to cover 6 months interest. No one would lend. I have horrible personal credit, mortgage victim. The figures worked. The deal fell through, as I couldn't fund it. What doesn't kill us makes us stronger.

I sat down one night after work and wrote down the name of every person I could think of that was within 10 years of retirement, or people I knew had money. The list included people I work with, My parents friends, former work associates, people I went to high school and college with, and people within the community. I came up with about 20 names. I wrote up what I call an investor packet, which is a brief synopsis of the business model, what private funding is, how it works, what they can expect, how their funds are secured and paid back, their responsibilities, sample deals and contracts. I contacted as many as I could find on my list and gave them a brief pitch. Those that were interested got a packet via email or snail mail. A couple of them got offended. How dare I ask them for money? Hey, sucks for them, I was giving them an opportunity to get in on the ground floor of something big.

But here is the kicker: Not ONE person on my original list chose to invest. Not one. A bit of a blow to the ego. These people know me, know my background, worked side by side with me. Now what was I going to do? I wasn't going to give up.

One night at my "day job", I'm in the employee dining room talking to one of my associates about a house I was going to look at the next day. She had expressed an interest in buying a house in the area that I am working, so I was telling her about the house with the thought that I may have a back end buyer here. Rehab it to her specs.  There were two other people sitting at the table and they are Polish, so they were speaking to each other in their Mother tongue.

The conversation took a sudden turn when I noticed the folks next to me were paying attention to our conversation. I had been talking about funding the house that I was going to look at. By the time our break was over, I had secured TWO verbal agreements from private money lenders totaling $100,000. Yup. It was that easy, and very unexpected.

As if that wasn't enough, one night, at the end of the shift, we are all getting ready to go home and I just happened to blurt out to a friend of mine: "Hey Catherine, you don't know anyone with an extra 50k in their pocket that wants to earn 10% real quick do ya?" The gentleman behind me said "How is my money secured?". Two days later, I had a promise of $50,000

I am making offers on 2 properties tomorrow with plans of winning them both. Fairly light jobs so hopefully I'm not getting in too deep too soon. If I get both, I have a friend with a construction background that said he'd be a P.M./mentor on the bigger job to get me started.  Here we go. The dream is going to come true.

My point is this. Don't give up. These lenders are not the people I expected them to be. They work in the trenches like me. You will find lenders in the most unexpected places. It only takes two or three to really get things moving.  Keep networking and coming up with ideas. 3 weeks ago, I had no funding. Today, I have access to $150,000. In 3 days I'm meeting a gentleman who heard about my company through one of my contacts from the original 20.

Oh, and that original deal, the one I couldn't fund? That deal had gotten outbid while I was scrambling to provide proof of funding. Well, the deal that outbid me fell through and I am re-submitting an offer tomorrow for $13,000 less with proof of funding and my realtor feels strongly I will get the deal. Why? Because it's cash, this will be the forth time its been listed and they just want to dump it according to her sources. How's that for the stars lining up?