Beginner trying to raise capital

[Reuben Royal]

Hey guys! I'm brand new to real estate investing. Me and a partner of mine have been pooling together our resources in an attempt to land our first deal. We've found some houses that we would be interested in flipping but don't have the down payment money for a loan. I've heard that one option is hard money but carrying a payment like that until the house sells would be tough. So I'm looking to private investors. My question is, since I don't really know anyone with that type of money, how would I go about finding some in my area? I've done a lot of research on investing and have a mentor that has been helping me out and showing me some pointers and I have all the resources of actually making it happen, but I guess I'm not really sure how to find the people with the money and how to convince them to invest in me. Would love to have some input on this from a pro! Thanks!

[Jon Holdman]

Here's how you do this. You won't like the answer, but it is how this works.

Talk to everyone you know and everyone you meet about what your doing. Just work it into casual conversation. Don't go to a new person you meet and say "hi, I invest in real estate, would you loan me money?" You think "of course not", but people have said exactly that to me. In that first discussion, don't say much more. You've told them what you do. If they're interested, they will ask more. Maybe right then, maybe in a future conversation. Do this enough times and someone will say they have some money and are interested in something like that.

Now, it sounds like you have deals lined up and ready to go, where what I describe is a process. "How, Jon, can I get one of these people to fund a deal right away?" You cannot, unless you get very lucky. It is a process and it takes time to cultivate private money sources.

If you need money quickly, you have two choices. One is a bank, with all their T'c & C's and paperwork. The other is a hard money lender. Depends on the deal if this can work. A $25K profit, without considering money costs, on a $250K deal isn't much. Pay for money and this becomes a few grand. A $25K profit on a $100K deal is much more interesting. You can afford to pay, say, $7000 in hard money costs and still have a nice profit.