Private Money – We’re all about it. You’re quickly becoming a confident real estate investor and fingers crossed that your wallets are growing as fast as your knowledge base. Today my focus is all about what private lenders need… and ONLY what they need.
Here’s what I mean….
Don’t Just Play the Part, Look the Part
Before we get down to business, let me tackle the topic of looking like your all business. The importance is often underestimated, and I’m always amazed at how many “professionals” fail to look the part.
Presentation matters, my friends!
Show you care about yourself, your business, and the deal you’re working by being neat, clean and just plain ole’ put together. You want to look like the kind of person others want to be around and do business with. Make your prospects feel like you are the guy (or gal) he (or she) can feel confident lending big bucks to.
Look the Part to Secure your Investor. It’s that Simple.
If They Need it, Get it!
In short, it goes something like this…
“I’ve got a deal, I thought of you, it’s a hot property, so it won’t be around for long, it’s a great opportunity for the right person.”
You keep it short, sweet and on point when you present a rehab investment deal to a prospect, right? But once you know your prospect has raised an interested eyebrow, you’ve got to find out what other information he or she needs to make a confident decision to move forward.
So your next question should be…
“Are you ready to get started investing and making a good return now, or is there something else you need to see before we move forward?”
Every investor is different, so some may be ready to rock, and others may need more information before they jump…
Some may want to know what other investors typically ask to see. If they don’t know what information they need, be honest and share what others have asked to see in the past.
Sincere disclosure will gain you credibility every time and that’s a win for you. Bottom line is – always strive to provide whatever your investors need so they can move forward feeling confident that both you and your deal are the right fit.
Just the Bare Necessities, the Simple Bare Necessities
Find out what your hard money or private lender needs to see… then call it a day. Giving them what they need is enough, so don’t complicate things or – more importantly – risk the deal by overcompensating. Sharing too much information may make your lenders second guess the opportunity.
Here’s a safe rule of thumb: If they haven’t thought of it, don’t make them think of it. Keep it simple, provide only what’s asked and encourage forward mobility.
The 411 on Investment Package Contents
Not every lender will need these. Some will ask for all, some won’t want any. But it’s best to be prepared for any and all of them, right? Remember, ask them upfront what they need to make a decision, and give them ONLY what they ask for. Period.
So here’s a comprehensive list of key items that a prospect may request while considering your investment opportunity.
Purchase & Sale Contract: This one’s all about details – asking price, how much work needs to be done, etc., which your prospect will (or should) already know, so you can usually bypass this one. But again…if they ask, you show and tell.
Appraisal or Comparative Market Analysis (CMA): Traditional loans typically require an appraisal, so unless the lender requires an appraisal, don’t do it! Save yourself a few hundred by printing good comps from the MLS.
Scope of Work & Repair Estimate: I’ve always had contractors put these together, but if you’re a handyman, you could do it yourself and save money.
Loan Offering: I’m talking about the loan amount, rate of return, time frame, etc. The loan offering shows the deal specifics, and you can craft that to fit your lender’s needs. Here’s the thing – when you present the deal, you already know that the lender is the right fit, and if they’re interested, they also know the deal is right.
So the loan offering is really about visual impact. People are visual my nature, so by putting it on paper, you may be able to sell it faster. The key is to keep it simple and short. I’m talking a quick snapshot either faxed or emailed, followed by an immediate “Do you need anything else to get the ball rolling?”
Again, it’s all about providing what your lender needs and encouraging that next step forward.
Title Report: Personally, I’ve never shown this to an investor, but if you need to share it, be sure that the title is clean, and just simply relay the information. There’s no need to physically show the report unless it’s requested. Do you see a theme here? Keep the process simple.
Home Inspection Report: Here’s another one I never share. Like appraisals, home inspections cost money, so if you can avoid them, do so. If you’ve got a trustworthy contractor, have him or her look at the property, and bam… no need for a second opinion unless your prospect asks.
Pictures of the Subject Property: If you’re buying a major rehab job, scope of work may not be enough. Remember that visual impact we just mentioned? It applies here too. Some people need to literally see things on paper, so if pictures will help seal the deal, then go for it. It all depends on the deal and the investor.
Do Whatever it Takes
Going that extra mile makes all the difference in your investing success, and it’s that extra mile that just might be your killer closer. So if you’re investor asks you to show them the property, do it. Personally drive them to that property, and do it with a smile. If your prospect asks you to meet his Realtor friend, you say, “Sure, love to!”
Here’s the best part – sometimes your willingness to provide your prospect what they need is simply enough. Your investor may make an “inconvenient” request, but in the end, because you didn’t hesitate to agree wholeheartedly, you may not need to follow through. In the end, you satisfied their need for “more” by being cooperative and agreeable.