Do You Make These Mistakes When Raising Private Money?

"Let's wait for a while and see how your next deal goes..."

"I'm going to keep my money in CD's..."

"You've never done this before?! Ummm..."

"My lawyer says this isn't a good idea..."

If you've ever heard a prospective investor say one of those things to you, then this is one of the most important messages you'll ever read.

Here's why:

I'm going to share some common (and blatant) mistakes that real estate investors make when raising private money. Once you know these pitfalls, you'll have 80% of the game won.

Mistake #1:Waiting until you have a property under contract to talk to private investors

Mistake #2:Having marketing materials that talk all about your company and do not focus on benefits for the investor

Mistake #3:Not listening at least 5 times as much as you talk when you are communicating with potential investors

Mistake #4: Not asking enough questions of your private lenders

Mistake #5: Pursuing somebody to lend their only $50,000 to you

Mistake #6: Not getting a written commitment from you lender once they say 'yes'

Mistake #7: Poor (or zero) follow up with potential lenders after points of contact

Mistake #8: Offering terms that seem "too good to be true"

Mistake #9: Not building unshakable credibility

Mistake #10: Not covering your behind from a legal standpoint

Mistake #11: Using a 'broadcast' marketing strategy

Mistake #12: Using a one-dimensional marketing approach

Mistake #13: No flexibility in your deal structuring

Mistake #14: Bad mouthing the stock market as an investment to your investor's face

Mistake #15: Improper or lack of positioning yourself/business to private investors

Mistake #16: Making sure the lender thinks the only benefits to investing with you are rate of return

Mistake #17: Sending a direct marketing campaign to an untested list

Mistake #18: Poorly designed marketing materials/sales letters/website

Mistake #19: Being too aggressive/needy in pursuing a potential private lender

Mistake #20: Discounting the value of your own sphere of contacts in developing potential private lenders

Mistake #21: Trying to use one-step versus multi-step marketing

Mistake #22: Not knowing which problem you are solving for prospective private lenders

Mistake #23: Not providing enough of a value proposition to those lenders who are on the fence

Mistake #24:Being unprepared for a presentation to private lenders

Mistake #25: Not knowing the in's and out's of self-directed IRA investing

Mistake #26: Not knowing the basic tax impacts of various types of private money investments

Mistake #27: Eliminating your profits on deals by paying all of it to private lenders b/c you gave away the farm

Mistake #28: Not knowing basics of securities laws

Mistake #29: Allowing the potential lenders attorney to kill your deal at the 11th hour

Mistake #30: Not educating yourself on new changes in tax/real estate/investment/retirement laws so you can exploit to your benefit

 

By all means this is not a comprehensive list, either!

In coming days and weeks I will be going through each of these one by one so that you can better arm yourself for raising capital. A wise man once said: "just tell me where I'm going to die....and I won't go there!"

-Happy Investing