Turns out Kevin had a salad at lunch...
Ahhh! Another week, another blog post. Writing this blog has become a highlight for my week. Definitely the best part of Monday. Today, I want to talk about my favorite part of the business: Raising Money. This is undoubtedly one of the biggest hurdles new real estate investors face. I won't say we have it all figured out, but we are in a much better position then we were just 3 short months ago.
How can you possibly afford a million dollar property at 25?
It's simple really. The acquisition of property is commonly funded by banks or lending institutions. For the sake of this blog, we will call those lenders "Hard Money Lenders" . Like most lending institutions, Hard Money Lenders will cover the bulk of the purchase but you'll have to bring a deposit. The deposit generally is 10%-20% of the purchase price.
"Ok Alex great, I still don't have the $100,000 to $200,000 to buy Boston's best real estate deal". That's fine! I don't either!
Next comes the fun part. Networking and meeting new people who will give you the deposit money. Let's call them "Private Money Lenders". To most people who want to invest their money, getting a 10%-15% return is HUGE! A lot of people aren't getting that kind of return in the stock market. So if you can show private money lenders a deal that makes sense, they will gladly write you a check for the deposit. You just have to go out there and find them!
That means going to dinners, meeting for drinks and going to networking events. We currently have to raise roughly $540,000 in private money and it's awesome! It gives you the opportunity to get yourself out there and establish a name for yourself. Something you can do that we do is...
We offer a quick 5% referral fee to anyone who can introduce us to a private money lender on a deal. That's generally around $3,000-$5,000 just for a name.
Don't wait for money to fall in your lap. Go out and hunt for it (in a suit)! Put yourself in a position to scale your business. Raise up your glasses and have a salad! But not too many!