What if you die?... (and other private investor objections)

"What happens if you die?"

This is a question that you don't normally like to think about.

On the occasion you do think about it (like when you're driving through an ice storm) you might think about pearly gates, St. Peter, harps, angels, a guy in a red suit with a pitch fork (just kidding0..But you sure don't like to think about it during a business meeting. And, especially during a meeting with a private investor.

But, there I was, facing this very question in that exact situation.

Not fun.

However, it's a fair question for someone to ask that may invest with you. They want to know how they're going to get their money back if something happens to you. It's an entirely logical question. One you would probably ask yourself if the roles were reversed. In fact, there are probably other common objections or tough questions that potential investors would have to placing funds with you. Questions such as:

"What if the real estate market goes down?"

"What if you don't pay me?"

"What happens if the property doesn't sell/rent?"

"I have to talk about this with my spouse."

"I have to talk about this with my psychic."

Ok - you get the point.

It should be entirely expected that your investors to raise objections and tough questions. If you are ever working a deal with a private investor and they don't raise any objections or ask any questions it probably means one thing...

They aren't interested.

When people raise objections about buying anything, it means they are at least considering it (which is a good sign if you're the one that's selling). If somebody just smiles and nods and then tells you to "have a nice day," or "thanks for meeting," it's pretty much a blow-off.

Now, if you've already done what I teach and pre-qualify the potential investor before they even sit down with you, you'll have a lot less objections to overcome. Why? Simple:

Because the best way to overcome objections is to overcome them before they are raised.

Easier said then done, eh? All right, try a couple of these out...

Objection: "What happens if you die?"

Answer: "Mr./Mrs. Investor, I have specific measures in place (such as life insurance, note default provision) that ensure continuity in my business in the event that I am incapacitated. Your investment(s) will not be at risk if something happens to me."

Objection: "What if the property doesn't sell/rent?"

Answer: "That's a good question. Since we acquire our properties with a large margin of safety, your investment principal is protected by a 30% cushion below current market value. This means we could drop the price of the property/rent significantly if we needed to move it quickly and you would still recoup your investment. In addition, we are very focused on marketing and spend a good deal of money ensuring that our properties are first to get seen, sold and rented. We have hungry customers and I do not anticipate this being a problem at all."

Objection: "I have to run this by my spouse."

Answer: "That would be fine. In that case, what I would like to do is hold your spot for investing on this deal. If you will commit to placing the funds, subject to your spouses approval, I can begin preparing. That way you won't lose out on this one."

 

OK. There you have a few of the most common ones that I have faced and some frequent and tested answers that I have given. Ideally, you won't face these types of objections, because your marketing/pre-sell literature has taken care of them fore you. The face-to-face meeting with the investor is ideally just a "meeting of the minds" and a place to get investment commitment. You don't want to be doing a lot of selling during the face to face meeting. This means you've skipped or accelerated some pre-selling steps.

Now, here's something else that you should be thinking about right now when it comes to your business, and that is...

What will happen in your business if something bad does happen to you?

Even though you don't like to think about it, there is always the possibility. Our world is a crazy place. Therefore, you should have a contingency plan in place for your business to ensure that your private investors (and spouse/family) have protective measures in place. You don't want to leave those closest to you and your private investors with a huge and costly mess to work through if something bad does happen.

Sorry to sound the "dire" warning bell, but I feel this is extremely important and your taking bigger risks then you need to without having a plan in place.It will be a huge relief for you as well. And, it just makes good business sense.

Happy Investing!