I. Why you can’t raise Private Money (and how to fix it!)
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This is why you probably are failing at raising private money for your real estate deals! This video shows you how to fix your real estate funding problem easily and quickly!
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Video Transcript Below
Hey! Daniil Kleyman here, and I wanted to record this short video for you called Why You Can’t Raise Any Private Money for Your Real Estate Deals, and How to Fix It. And I’m going to fix it for you. And stay tuned because later in this short video I’ve got some awesome, amazing graphics that I created myself just for you. You’re going to be totally blown away.
So, for the purpose of this video, I’m going to assume that you are in residential real estate. You’re either rehabbing and flipping, rehabbing and holding, buying and holding property already in good shape, et cetera.
If you’re anything like the typical beginning investor out there looking for money, you’re struggling to get people to partner with you or lend to you for your deals. And if you’re in real estate and don’t know what private money is, or are not going after it yet, then I’ve got to ask you, “Why not?” Clearly, the banks out there are not lending. They don’t like dealing with investors. Investor loans for … Whether you’re looking for construction loans to rehab and flip, or if you’re looking to hold property, any kind of investor loans are practically impossible to get out there these days. So, if you’re looking to do real estate deals, then you need to be looking for private money. And private money is basically just loans from individuals. Find people that want to partner up with you on deals, people that have some cash to invest, whether from their bank account, or from their self-directed IRA, or other sources. That’s really where it’s at. If you want to be buying deals other than just wholesaling, you don’t need money to wholesale. But if you want to be taking possession of property and doing any kind of real estate deals, whether you’re flipping or you’re buying to hold, you should be looking for private money.
So, let’s assume that you’re smart and you’ve already found some potential private lenders or private money partners. And you know what? They’re everywhere. I’m going to assume, for the purpose of this video, that you’re not using the fact that you can’t find any potential partners as an excuse, because they’re literally everywhere. It’s the guy you work with; it’s the guy in your gym; it’s your doctor. People really are on every corner that don’t know a good, safe place to invest their money. They’re all potential partners for you. So, I’m going to assume that you’ve already found some potential private money partners or private lenders, but just can’t get anyone to partner up with you.
Do you know why that is? I’m going to be willing to bet because you’re going about it all wrong. Let’s say this is you. And before you freak out about how amazing my graphics are, I want you to just calm down. Take a deep breath. I went to school for a very long time for this, and just know that this is copyrighted. This is my amazing artwork, okay?
So, let’s assume this is you. And again, please don’t be distracted by the amazing, amazing, amazing illustrations that I’ve created for you. Just focus on what I’m telling you. We’re going to assume that this is you, and you’ve found a house that you want to renovate, and you’re eager to do this deal. It’s going to be a great flip. Houses are selling. Similar houses are selling very quickly in your market. You need some money to buy and renovate this house. And let’s say you’ve found a potential private lender.
Well, the way most people that I’ve encountered go about asking for money and looking for money for their deals is completely wrong. I’m going to be willing to bet this is you: “Hey, can I borrow some money, please? Pretty please.” You’re probably approaching this guy saying, “Hey, listen, I’m in real estate. Can you lend me $70,000? I’ll pay you back in six months when I sell this house.”
This guy is probably looking at you, going, “Well, I don’t know you from a hole in the wall. You don’t really seem that experienced. You don’t really seem that professional. You’re not really telling me what I need to know about the deal. I basically just don’t have any reason to trust you.” Right? So, he probably says something like, “Oh, I have to go wash my cat.”, and runs away from you.
What if instead you were able to build instant, undeniable credibility, even if you’ve never done a deal before? A complete 180 from what I just showed you. What if instead you could do this?
So, what if instead you had a simple piece of software that anybody can use? Literally anybody. And you plugged in a few numbers here. Let’s say there is a deal you want to rehab and flip. You plug in your purchase price, what kind of financing you’re looking for, how much you want to put into renovations; then you click this button, Print Reports, and select Full Presentation for Private Lender. And all of a sudden, you have this, that’s basically automatically created for you: you’ve got a five page presentation that you can print out. And when you’re meeting with your potential private lender or your partner, instead of saying, “Hey, man, let me borrow some money.”, you put this in front of them.
And here’s what you’ve got: you’ve got a cover page, the picture of the property, your logo at the bottom, and your contact information. Then you’ve got this page that clearly shows the details of the property, how many bedrooms, how many baths, square feet, year built. And then look at this: you’re showing your private lender exactly what they need to know about the deal. Nothing more, nothing less. After repair value of this house is $200,000. You’re looking for a total loan of $135,000, which is 68% of the after repair value. It’s going to take you three months to rehab, three months to sell, six months total, and you’re offering your private lender an 8% interest rate.
And then you can insert some notes about the project, so I wrote “Great opportunity to fix and flip a house in a high-demand area. Average days on the market for this neighborhood is only 44. Property requires mainly cosmetic updates as a gut renovation was performed in 2000. Multiple Class A contractor bids have been solicited. Partners offered the first deed of trust.”, et cetera, et cetera, et cetera.
And then look: this section here below shows, “Hey, this is exactly how much money you’re going to earn over the next six months by lending to me, to the dollar, and this will be your cash-on-cash return and your IRR.”
Do you think this is going to give you some credibility over the guy that calls up somebody and says, “Hey, can I please borrow some money?”?
And that’s not all. Here you’ve got a cashflow schedule. This is exactly how the deal will play out over the next six months. You’re showing your potential private lender what they need to fund at closing, how the rehab draws will be structured, how their interest gets calculated, and how they get paid out at the end.
And then you’ve got a comparable sales report. So, over here you told them the after repair value is $200,000. Now you’re showing them some comps to back up your claim that the after repair value is $200,000.
And finally, you’ve got a page with some additional pics.
Pretty easy, right? So, would this make you look, let’s say, just a little bit more professional using this than if you weren’t? We’ve got people that have never done a deal before in their life, but they’re presenting this and raising money from potential lenders.
And that’s not all. I don’t want to go into great detail about what this software can do, but you can do a whole array of deal structuring here to meet your lender’s needs. You can throw in a profit split and say, “I’m going to offer you, let’s say, a 7% interest and a 25% profit split.” And so, this is what that would look like. Same thing, you’re looking to borrow the full cost of the project, but now your private lender is making a 22% cash-on-cash return because you’re giving them a 7% interest rate. But also look up here: a profit split to lender of 25%.
So, look how different your situation could be if you had this software. Now you can say to your private lender, “Hey, check out my sweet deal proposal.”, and hand them this five page professional-looking credibility builder, this professional-looking presentation that shows your potential lender everything they need to know about the deal, and it makes you look like a rock star. And it took you about three minutes to create it with a couple of clicks of a mouse.
And your private lender says, “Oh my God! You’re so smart!” And look how happy this guy is. Look at the big smile on his face all of a sudden, right? Isn’t that nice? And then he says, “Can I please partner up with you? Pretty please? Can I please invest money with you?”
And now you say, “Oh, I don’t know. Maybe. I’ve got a lot of people that want to partner up with me. I’ll let you know.” And now you’re in control, right? Isn’t that nice? All of a sudden, even if you haven’t done a deal, with the tools that you can get from us for free, by the way, for the most part, you can look like you’ve been doing it for years.
So, the good news is you can go to RehabValuator.com, www.RehabValuator.com, and get a free copy of this software. It’s called Rehab Valuator Lite.
As a disclaimer, the free version won’t let you do everything that I just showed you, but it will let you do a lot of it, and it will make a huge difference in your business. And if you’re one of the 20,000-plus users that we already have, then you know how powerful this software can be. And I hope you’ve enjoyed this video, and you can spread the word.
But if you don’t have this software yet, go to this website right now. We also give you detailed tutorials on every step of the way, case studies, and content on wholesaling, rehabbing, deal structuring, and more. I’ve got a full-time real estate investment business. And so, I record a lot of case studies from deals that I do, and I put together content on deal structuring and various real estate strategies.
But before you go to our website, if you could do me a favor and hit Like below this video, if you’re watching it on YouTube, and you could leave a comment below as well. And lastly, if you could share this with your friends who can use this software, especially friends who can use more credibility in their business.
On our website, we for free give away a ton of resources for investors that, if you just put them to good use, it can make a huge difference in your business.
So again, spread the word, leave me a comment, and if you don’t have this software yet, go to www.RehabValuator.com and get your free copy today. All right? Thanks for watching our video on raising private capital for real estate.
**NEW BONUS WHEN YOU PURCHASE REHAB VALUATOR PREMIUM: GET OUR WHOLESALING AND PRIVATE LENDING CONTRACTS!
“Hi Daniil. I just want to tell you that I used Rehab Valuator Premium for private funding for the first time and got $91k to fund my deal. Your software has made me money with my wholesale deals. Now it looks like I will make money on rehabs with the software as well. You are helping a ton of people. Keep doing what you are doing.”
Tim Rogers - 3 Rogers Investment Group
“ I have a private lender with whom I’ve been trying to work for the
last 8-9 months. He’s always waffled on the deals I sent him, but the last three deals ($75K, $102K and $126K) he grabbed immediately. He said that my presentation was just what he wanted to see. … Now, I’m using it for all my deals and working with three more private money lenders. It’s a great package for the beginning Real Estate Investor and a fine tool for the pros.”
Jack McClure - Oak Grove Investing, LLC