At some point most property investors will run out of their own deposit funds. When that happens, most investors just stop investing. But it does not have to be like that for you. In this article, I want to share with you some simple strategies which you can use. Not only can you find people with money, but also attract them to you, so that they want to lend to you.
Why do people lend money?
There are plenty of people who have money in the bank, which right now is not doing very much for them. With the rate of inflation over 2% and most people receiving less than 1% interest per annum from their bank, it means that savers with money in the bank are literally losing money every day. This is because it is being eroded away by inflation.
Anyone with money in the bank right now, has a real issue. They are looking for alternative ways of getting a better return on their money rather than leaving it in the bank. This money might be savings they have built up over time, or from an inheritance, or sale of a business, property or shares. It does not really matter where it has come from, the fact is it's not working for them by leaving their money sat in the bank.
"Anyone with money in the bank right now, has a real issue"
This is why the peer to peer lending platform www.CrowdProperty.com has been so successful, it offers lenders the chance to earn a secured 8% per annum. On as little as £500, you are lending money to help fund property development projects. This secured 8% p.a. can even be tax free, if invested through the HMRC approved, 'CrowdProperty ISA'.
Why don’t they just invest in property?
However, there are far more people, who have money in the bank and would love to invest in property, but they just don’t have the time, knowledge or inclination to invest in property. How do I know this? Well most of my students use other people’s money to invest once they have run out of their own deposit funds.
How do you find these people with money?
There are people everywhere with money, but the problem is most people in the UK don’t talk about what they have. It is seen as rather uncouth to talk money. In fact, I guarantee that you already know at least a few people, family, friends or work colleagues, who have got some money in the bank that you don’t know about. Most people keep this to themselves.
You never know who might have money. It is important not to judge people, or to make assumptions about who has money. Someone may have had no money for all their life, and then they inherit some money. They could also inherit money from a property or family member and they don't know what to do with it. They then leave it in their bank.
"The only problem with asking people you know for money, is that they may not understand property, or what's going on in the property market right now "
You have two choices
First of all, you could start speaking to everyone you know. Don’t ask them directly if they have money, but instead ask them “Who do you know who might like to get a better return on their money?”. If you ask enough people, then you will find some people with money.
However, most investors don’t like asking people they know. They are worried what they might say, or think about them, if they are asking for money. If this is how you feel, then you need to get over it. Recognise that you can actually help your family/friends at the same time as helping yourself. It can be a mutual win-win.
The only problem with asking people you know for money, is that they may not understand property. They also might not know what’s going on in the property market right now. They may be nervous about lending you money to invest in property. This means you have to spend time and effort educating them about property. You will have to let them know why now, is actually a good time to invest, as long as you know what you are doing.
Alternatively, you could start looking for people who have money and are already bought into the concept of property investing. They just don't have the time, knowledge or experience to do it themselves. Where do you find these people? Well the best place is at property networking events or property seminars. These people might be attending because they want to learn how to invest for themselves. But once they have learnt how to do it, they realise that they don’t have the time or don’t want the hassle. They would rather work with a more experienced investor like you. Sometimes people with money deliberately attend property seminars and networking events - this is to find people like you with whom they can work with.
Here is a big tip: If you are looking for cash rich investors, make sure you attend the paid for property seminars. These generally attract a better quality of investor, rather than one of the 'totally free' property events. They will just be full of sales pitches and attract all the wannabe investors. The investors often don’t understand about the value of investing in themselves.
Also if you can, always pay to go VIP. This is because you want to be mixing with all the other people who have money and have also paid to go VIP. I always pay extra to go VIP at the events I attend. I want to mix with the right kind of people, who invest in themselves.
Raising your profile To Attract Private Lenders
When you meet people at property events you need to connect with them. You need to start to build a trusted working relationship. This can take time and so don’t expect someone to offer you £100k the first time they meet you. They need to get to know you, trust you and work out that you know what you are doing. You can dramatically speed up the process of building your credibility by raising your personal profile. There are a number of ways of doing this.
Your social media is the easiest way to raise your profile. You need to let people know you are active in property. Don’t keep it a secret. You also need to demonstrate your results. Posting pictures of your property on Facebook and Linkedin works really well. I am sure you have seen pictures of people holding keys in front of their new property. They may think this looks a bit cheesy, but it proves you are in the game. You could put up the 'Before and After' pictures of your latest property project. You can also post pictures of you and other investors at property networking events and training. This shows that you are investing in yourself. Don’t expect anyone to invest in you, if you don’t invest in yourself.
The next step to raise your profile is to get known at your local property networking meetings. Attend every month, arrive early and plan to leave late. Don’t spend all your time talking to people you already know. Make sure you connect with and meet the new people who you don’t recognize. Your goal is to become a recognized and a trusted face at your local meetings.
"The very fact that you have been chosen to speak automatically gives you some credibility"
At the property investors network pin meetings there is an opportunity for anyone to stand up for 20 seconds to introduce themselves. They say how they can help other people in the room. This is a great opportunity to let everyone in the room know what you are doing. You can attract people to come and talk to you. Take this opportunity to raise your profile but make sure you prepare for it. Don’t just stand up to see what happens. Think about what you want to say and then practice it before the meeting. Remember first impressions are important, so you want to make the most of this opportunity.
Even better is if you can be one of the official presenters at a property network meeting. By standing at the front of the room and giving a presentation about your journey, experience or a particular strategy, or case study - you can demonstrate your knowledge, experience and expertise. Everyone in the room gets to know you. The very fact that you have been chosen to speak automatically gives you some credibility. I know most people dread the idea of standing up in public and speaking to a group of strangers. It can be very daunting. I used to hate it but with some training and practice it is not that bad. The benefits massively outweigh the fear.
And finally a fantastic way to raise your profile, to gain credibility and attract potential investors, is to be featured in a magazine like YPN. The editors are always looking for interesting case studies of how people like you have achieved success with different strategies. Many of my students have been featured in this publication over the years. They have often told me how they are contacted afterwards by people who want to work with them.
So the message is, there are plenty of people out there with money in the bank, who would like to get a better return on their money. To attract these people to you, raise your profile, get out there and attend events and let people know how you can help them.
I hope this article has been useful and has given you some more ideas about how to attract private lenders.
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