Consider the Impact of Your Private Money Elevator Speech

Have you ever really given much thought to what is known as an “elevator speech”? This is what you do, when you have only a brief moment to talk to someone, and what you have to talk about is very important. How will you handle this opportunity? Will it mean great things for your business, or will it become an opportunity wasted?

In the world of private money, we encounter potential lenders each and every day (whether we realize it or not) and, as such, we also have elevator speech opportunities with the same regularity. Since private money is such an important part of modern small business finance, it is necessary to think about how you will approach people, given a brief moment of opportunity.

I’ve met business owners who have secured huge amounts of financial leverage, just by having a good private money elevator speech. What goes into such a speech to make it so persuasive? Therein lies the secret. You don’t have to be an expert salesperson or sound like, in any way, you have a pitch. That will actually drive more people away than it will produce success.

A good elevator speech starts with a simple introduction. Eye contact, hand shake, all that good stuff. You want to establish first name contact as quickly as possible to get the conversation comfortable. Small talk is for amateurs, so stay away from chat about the weather, politics, or the like, unless you have a very good reason to do so.

Next, you want to find out what your potential lender does for a living. Be interested in them, and seek to understand in as short a periodof time as possible what sort of career type they have. This is only important in that it helps establish why they would be interested in your private money program, rather than if they have money to lend or not.

Last, you want to be able to introduce what it is you do. This is the most important part, but don’t ignore the steps that lead up to it. You want your description of your business to be brief, compelling, and leave some questions in the other person too. Their questions and curiosity are mandatory to them being interested in becoming a potential private lender.

How do you know if your speech was a success? You don’t have time for a commitment from them, nor do you have time to even talk details. All it takes at this point is a simple question or comment. If they ask a question about your business or express interest in it, then your speech has been a success. Make sure to gather their contact information (and give them yours too), and you’re on your way to working with a new client.

More on that will come in future posts but, for now, get your speech down so you can bring your private money opportunity to as many people as you can.

The Many Uses of Private Money as Business Capital

A natural inclination among business owners is to think (pessimistically) that capital sources somehow do not or will not apply to their situation. Maybe this point of view is because you were refused financing of some kind. Maybe it’s because you sought venture capital and your business plan was not selected for funding. Maybe still it is because you’ve heard (through the grapevine or just the mainstream media) that business funding is tough to get and are just worried that this trend will leave you “out in the cold”.

It is true that getting business funding is tougher than it used to be. What is also true is that this trend tends to apply to traditional funding sources, such as commercial lenders, community banks, and even loans from government institutions like SBA. What else is there? Well, there’s formal venture capital, which by definition comes from an organized source that reviews numerous funding applications each year. There’s also private money, which is similar to venture capital, but typically comes from a single person and also has much fewer drawbacks.

Venture capital is typically reserved for tech companies and/or medical related products (i.e. businesses that have proven “home run” caliber potential). Unproven businesses, especially those that target investments, have little to no shot with “regular” venture capital, making private money even more attractive for these kinds of businesses.

Within any business, private business capital can be used for any of the following types of capital needs:

• Marketing expenses
• Business start up costs
• Product development costs
• Website design and development
• Product manufacturing and packaging
• Funding entry costs for investments

As you might notice, these types of costs are as critical as they are basic. You may, at this point, have a great idea for a business, and now need to do some or all of the items listed to help get your idea off the ground. How will you do this, if business capital is lacking or limited? Private money may be the answer. Does your idea have potential to become a profitable business? Does your business idea fall outside the scope of most venture capital firms? Is the idea something for which you can clearly and energetically show the value of to others? Answering ‘Yes’ to any or all of these questions is a sure sign that private money may be the answer to the capital needs of your own small business.

Just remember that the private sector has millions upon millions of dolalrs to invest. Recognize that you need privaet money for your small business, and then go get it! If that last part is still what has you curious about how best to proceed, then you’re in the right place. Stay tuned!

Business Capital Starts With A List

The need for business capital among business owners can be a no-brainer but how to go about finding this valuable part of a successful business can be more of a mystery. One of the unsung ways to create a continuous stream of business capital is to seek, pursue, and secure private money, which is simply a source of venture capital that comes from private individuals.

Where to find private money is a dilemma for many, but one that can easily be overcome when you know the right ways to go about finding the money you need. Because private money comes from (just what the name suggests) individuals, this means the potential lenders out there for you to find are virtually limitless. How do you sort through what could be millions of potential lenders to start your own journey towards a bank of private money?

It starts with a basic list. What kind of list, you ask? How about a basic list of people you know. This could include friends, family, co-workers, etc. What do you think of when you think about the prospect of doing this? Does it seem like an easy task or one that takes you outside of your comfort zone? The response you may have to this could vary, but the importance of making a list is without doubt.

If you’re naturally comfortable making a list of people you know who could be private lenders, then keep this in mind. The only rule at this point is to not rule anyone out, based on your opinion of their value as a lender. Judging a potential private lender by how much you think they have to lend, or their likely interest in private lending, is only going to do you, them, and your business a disservice. In short, let the lender tell you they have no interest..don’t assume this to be the case.

If you’re a bit uncomfortable with the propsect of presenting your business to people you know, then think about it this way. Are you doing them more of a favor by leaving them alone, or by presenting them with an opportunity to earn as a private lender, and letting them decide for themselves? The latter is clearly the better choice, so give your private lender prospects the chance, by at least showing them what opportunities you have available.

In future posts, we’ll explore in much more detail just how to go about presenting the opportunity that is private lending and how to go about actually securing the valuable business funding you need to start or grow your business.

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Answering the Million Dollar Question

In every situation where there is some sort of selling that takes place (and yes, you are selling what you do to prospective private money lenders), there is some sort of million dollar question, that many fear to face. Private lending is no different and the million dollar question you’ll sometimes hear (along with a good way to respond to it) is shown below. It and a complete list of common questions from private money lenders can be found in ‘Make Yourself a Money Magnet’. Let’s get to the question at hand.

Mr. Private Lender: Why couldn’t I do this or why don’t I just do this myself?

In the almost certain case that you’ll get this question at some point, consider the response below.

You: Mr. private lender, that’s a great question. Why are you not buying these properties? Certainly, you know how to or can afford to rehab them, find buyers, put together lease option deals, find buyers or renters, and manage the portfolios. The answer to your question is that I have the same skills and desire you do, but also the time to do the things I mentioned. You seem like someone who would rather make a safe, secure investment and not have to deal with the details. I would assume if you had the time, you would already be doing this, given the tremendous upsides. I’m here to show you how to make a safe secure investment in an economy that is anything but secure with most traditional investments.

Mr. private money lender…in a nutshell, this is what I do. I work with private money lenders and I buy real estate. I have other businesses, some of which I own and some for which I’m simply a capital contributor. Overall, I am an entrepreneur who also loves to show those who have capital make more, while doing it safely and securely. This stuff is not taught in schools. So, Mr. private money lender, I have two properties I am going to buy, either using your capital or someone else’s. What kind of a return are you looking for? How much is the most you will invest? What is the least you will invest? What types of properties are you willing to invest in? Single family, duplex, commercial, businesses, land, developments, what? How fast can you close? Answers to these questions are all I need to get the ball rolling.

Please feel free to add your own comments or questions by replying to this post.

Manage Your Way to Business Credit and Private Capital

In a previous post, I discussed the all-important aspect of having a solid business idea. Not only is a good idea critical for the entrepreneur to enjoy the kind of business success they seek, but it also is a critical area on which your business will be judged by funding sources.

Another important aspect of business success is that of management. Many entrepreneurs are classic dreamers and, as such, are good at coming up with new ideas. It is taking these ideas forward that is not always easy. One must have a management team in place to help bring a business idea to life. Having such a team does not mean having to have employees. Many common management tasks can be effectively outsourced, especially in today’s virtual world of commerce.

Examples of management tasks that you, as an entrepreneur, need to consider are:

• Marketing and design of promotional materials
• Website design and administration
• Product development and production (if applicable)
• Product shipping
• Customer service
• Accounting/bookkeeping

If these kinds of tasks aren’t exactly your forte, then you are certainly not alone among the world of small business owners. The key is to recognize that these management tasks must be somehow accounted for, in order for your business to be successful. If it means delegating them to an outside source, so be it. The best way to enjoy success in business is to focus on what you do best and at least be aware of what else needs to be done so you can make it happen.

Now, let’s see how this applies to funding for your business. Let’s say you have a great business idea and feel you can show its value to anyone who might provide credit, capital or other business funding. This is great and what will you do when these same funding sources ask about your management team and how the tasks listed above are going to be handled? Will this be a nervous moment for you or will you be prepared with the kinds of answers that produce financial results?

The truth is that great ideas are born every day, which I think typifies how the entrepreneurial spirit is still alive and kicking in our country. What sets a good idea apart from those that never receive business credit or capital to support them is the quality of management that can be shown, in support of the business.

Make a point, if business is something you are committed to, to develop your management structure alongside your ideas. Sources of business credit and private business capital will want to see that you have good management. They’ll need to see it in fact, and when you can show you have your ducks in a row, that’s how your great idea can develop into your business dream.

The Endless Ocean of Private Money Sources..Ready to Set Sail?

One of the most common questions we get at the Money Magnet Man group concerns who makes the best private money lenders. Are they doctors, lawyers, tycoons, business owners, etc.? Are they family members, work acquaintances, friends, or fellow PTA members at your child’s school? Are they complete strangers, sitting next to you on plane, train, bus, or behind you in line at the video store or supermarket? Would it surprise that ‘Yes’ is the answer to all of these questions? Now, let’s see why.
As you can probably gather, we don’t really feel that there is anybody who is an honest to goodness “poor” candidate for being a private lender. Even if person X has little to no available funding of their own, there are ways to help them access funds they weren’t aware they could touch, and certainly they may know someone who might be a better candidate for this than themselves. The number one rule in play here is show below:
‘Never let your brain get in the way and presume that anyone is a poor candidate for becoming a private money lender.’
In a nutshell, we’ve seen way too many people jump the gun, make assumptions, and basically instantly rule out certain people, by virtue of some preconceived notion about a person’s potential lending ability. Don’t make this mistake! Everyone is a potential candidate, including both people you know and complete strangers. If you’re inclined to rule someone out, ask yourself ‘Why?’
Has this person told you specifically that they are not interested in the opportunity you have to offer? Have they reviewed your business model and decided that it wasn’t for them? Have they told you they have no money to invest, after having explored all possible options? Chances are very good that your answers will be ‘No’, ‘No’, and’No’ to these questions, and this puts you in a lot of company.
Most novice seekers of funding will make a lot of assumptions about funding source X, Y, or Z, and not ever really explore the opportunity that these prospective private money sources represent. Why? It is usually a fear response, a way of talking yourself out of taking action by presuming an outcome that keeps you from having to present your business at all. Sound familiar? Has this ever happened to you?
It’s OK if it has and, if so, it’s time to check out ‘Make Yourself A Money Magnet’, as well as our array of IRA-related educational programs. These will show you how to better visualize ways a private money source can work with you, how to have a healthier approach to seeking funding for your business or investment, and simply a greater base of knowledge upon which business confidence can be built.
Check out our resources today and, to comment or ask questions about this post, simply reply and voice your question or opinion. We value your contribution to our forum and hope to hear from you!

Understanding the Ramifications of HR-1728

Among real estate investors, there has been a lot of recent talk about the impact of the pending HR-1728 amendment that is currently slated to go in front of the US Senate. We at the Money Magnet man group wanted to briefly offer some discussion on this, since many of our visitors are indeed investors in real estate, even if their primary interest with us is the pursuit of private money funding.
First of all, we are neither attorneys nor politicians, so what is mentioned here shouldn’t necessarily be interpreted as the gospel. That said, there does seem to be at least some cause for concern and we wanted to give you our take on this. The section of the bill in question is Section 101, which lists who will be exempt from the guidelines and in it states that a private owner is exempt from the regulations for only 1 mortgage every 36 months.
In a nutshell, that would mean that investors who offer some form of creative financing as an exit strategy for their deals could face some pretty serious limitations. It could also affect homeowners, and the sad thing here is that the bill was likely never drafted to pose such limitations to investors in real estate.
We would advise that you look at this legislation, speak with your attorney, and, if you get a second, write to your Senator asking them to exempt Sellers of Personal Property from this bill. You owe it to yourself as a real estate investor to support the continued flexibility you’ve enjoyed in your business, so please don’t take this lightly and take action.
Since we are specialists in the pursuit of private money, you might be wondering how such a bill would impact a more traditional approach to the business that is empowered by private money lending. The short answer is that the bill would do little to restrict the purchase of properties using private or hard money lending. It would, however, restrict your available exit strategies, making fewer deals seem attractive and giving you fewer options to sell or otherwise recoup a lender’s investment, especially if your credit is less than perfect.
To discuss this topic further or to ask questions of us, please feel free to comment or add questions by replying to this post.

Understanding the Magnitude of Available Private Money

A common question that arises in the world of private money lending is ‘How much private money is actually out there?’ It’s a fair question but also one that fails to grasp the fundamental essence of what it mean to pursue private money for your investments or business. What I mean here is that most private money lenders do not know that they are suited for such a role until you bring opportunities to them. It is a virtually limitless, and largely untapped source of funding that is just waiting for you to act upon it.
Let’s review some basic numbers and you may have a better idea of what I am getting at here. The current population in our country is about 300 million. Of these, let’s say 30% are in an age group that supports having an investment portfolio of some kind and another 20% of this smaller group are in a position to invest money somewhere, somehow. Both of these are fairly conservative estimations.
When you put the calculator to the conservative scenario just described, you should find that there are about 20 million people, in this country alone, who are reasonable candidates for being private money lenders. Does that support what it is we want to do as seekers of private money funding? You bet it does. If you attracted one hundredth of one percent (one in 10,000) of this group to your business, you’d still have an arsenal of about 2,000 private money lenders at your disposal.
What if you worked something out with one in a hundred out of this group? You’d still have 20 private money lenders wanting to work with you in your business. We’ve all heard the phrase “one in a million”. In this case, one in a million means having a team of 20 eager and willing private money lenders waiting to fund your projects or business. I love those odds and so should you.
Consider too that the average investment-grade consumer has a portfolio of about $50,000, and that number is likely very low. If that were the case, your twenty investors would leave you with $1,000,000 at your disposal. If you had access to that kind of private money, would your business outlook change? Does it seem more in reach now than when you started reading this post? I hope so, and the numbers just don’t lie.
We encourage you to take a look at our electronic learning system ‘Make Yourself a Money Magnet’, or click here to learn more about our array of IRA related educational programs, to gain an even greater perspective on this topic. To discuss this topic further or to ask questions of us, please feel free to comment or add questions by replying to this post.

Private Lending Fact or Fiction

Below is a list of common issues or questions related to private money. We’d like to dispel any myths, answer some common questions, and also invite questions you may have.

Private money is as easy to obtain, and often easier than hard money. Fact or Fiction?
Fact: Hard money lenders have strict guidelines. Their LTV lending limit is usually around 65%. They often specialize in residential or commercial real estate, but usually not both. Rarely do they lend for other business pursuits. Points and fees are usually an added cost to investors. Private money, by comparison, carries few to none of the same restrictions.

It’s usually easier to negotiate terms with private money lenders than with hard money lenders. Fact or Fiction?
Fact: Most hard money lenders do not use their own capital. They go to other investors who put up the cash. The person who holds the cash is termed the hard money lender. He has to make his investors a profit and also a profit for himself, so they typically charge high point fees and interest rates so everyone can make money. Terms with a hard money lender, for this reason, are often non-negotiable. Private lenders do not always have such high rates and often do not have points and fees. You can also negotiate with them. Our program will show you how to raise a bank of private money using IRA funds, and you will learn how to use private money in such a way.

Having good credit is a benefit to attracting and using private money. Fact or Fiction?
Fact: TRUE, TRUE, TRUE. The reason for this has to do with your exit strategy. Should you decide to make a short-term project into a long-term one, or if your lender wants to cash out early, good credit gives you the ability to refinance, possibly pull out equity on top of your initial investment, and pay your private lender back. Now, you have both an investment and money to reinvest elsewhere, as well as a satisfied lender. Good credit affords you greater flexibility in every deal you do, and also will give your private money lenders greater confidence in your ability. This often leads to more deals.

Presenting a portfolio of deals done is always a bonus. Fact or Fiction?
Fact: Having a proven track record certainly won’t hinder you. With that said, keep in mind that private money lenders look at the deal. Following our proven system will be all you need to make sure you are evaluating your projects properly and presenting profitable pursuits to your lending prospects.

Having more than one Private Lender is key. Fact or Fiction?
Fact: Having multiple lenders gives you the upper hand. What if one investor is tapped out, or doesn’t like your deal? What if the only lender you have offers 12% and won’t go lower? Having numerous lenders gives you the ability to shop and negotiate with who will give you the best terms. In short, the benefits to having multiple private lenders are endless.

You can learn more about all of these issues and more when you check out ‘Make Yourself a Money Magnet’. We now invite you to reply to this post with comments on any of the issues presented, or with questions about other issues you have faced (or may face) when working with private money lenders.

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