Want to learn the secrets to raising private money for real estate investing? What this short tip video with Corey Peterson of Kahuna Investments! Check it out…only on FlipNerd.com
Mike Hambright: Hey, it’s Mike Hambright from FlipNerd.com. We have a quick VIP tip to share with you from Cory Peterson who is going to share a tip on how to ask for private money for your real estate deals.
Cory Peterson: OPM, other people’s money, how do you get it? Right? The one thing with money is that no one tells you how much they have. What I found is a really cool way, and I raised my first $100,000 totally by accident and this is why I know this works.
I met some people and I had some relationships. Right? The thing with relationships is when you start asking for money, that automatically turns people sour. Right? They don’t want to hear it because you’re going to ask them to make a decision, right? People don’t want that. That’s too much, right in your face pressure. What I found is I always ask them who do they know? Right?
For example, I played racquetball with this guy for years now. He’s an older gentleman, 65, lives in a retirement community. Truly, I used to be his financial adviser and I didn’t think he had any extra money. I knew where all of his money was and it was all tied up in other investments. I truly was asking him for his help. The story goes like this: “Hey Carl, I know you live in this retirement community. You’ve kind of seen what I’ve done.” If I had a presentation like you I would explain it, “Hey, I really want you to take a look at what I’m doing because I think you’re the kind of person that knows other people in your neighborhood that would love to make a pretty good return on their money. Carl, I know if you don’t understand it, no one else is going to. Can you proof this for me and see if it makes sense to you?”
This was when I was doing single family fix and flips, “Carl, I could probably pay you at around 12% rate of return and lock it up with a piece of property and give you a note in deed of trust so that you have collateral. That’d be cool to make 12% on your money.” He goes, “Yeah, yeah. That’s great.” He left and I thought that was that. The next day, he calls me and he goes, “Hey, Cory. Are you still wanting to do that 12%?” I said, “Yeah,” and I was thinking, “Man, he found somebody.”
Mike Hambright: Yeah.
Cory Peterson: He goes, “Cory, you don’t know this but I have a home equity line on my house and I get money at 3%. If you give me 12, I get to make a spread. How much do you need, Cory?” “Carl, I need about $86,000.” “Yeah, no problem. Where do you want me to send it?”
Mike Hambright: Wow.
Cory Peterson: That was my first taste at raising private money. I will always love Carl. I’m not going to give out his last name but he is my baha rushie [SP] mecca of money that gave me enough confidence. Because once I got that first piece, dude, it gave me… then I could say I raised private money. Then I created a private money program, which is your next step to actually have a program on how you take people’s money and you give them a rate of return. Then I used that booklet plus my credibility piece which is all of the things I’ve done before. Those two pieces have made me… I’ve raised almost, I can’t… 30 probably 20 or $30 million in private money over the last 5 or 6 years. The great thing about it is that they never want it back.
Mike Hambright: Yeah.
Cory Peterson: You give it back to them when you flip a deal but they’re like, “Hey, where’s the next deal? I want to get it in the next one. I like making that rate of return.”
Mike Hambright: Great, great.
Cory Peterson: So there’s a tip for you for raising private money. Just ask people if they would take a look at what you’re doing because you want their advice. You want them to critique you because really it’s made for them but they don’t know it yet.
Mike Hambright: Right.
Cory Peterson: And they’ll discover it. When they discover it and it’s their idea, man, that’s huge.
Mike Hambright: Awesome.
Cory Peterson: The other little tip that is caveat on that is once you get that first private money from that first person, do what you say you’re going to do. Deliver him his money back, principle plus interest. Then take all of his friends out to dinner and you say, “This is my guy,” and then he will do all the rest of the talking. You just shut up.
Mike Hambright: Thank you for joining us for another FlipNerd flip tip.
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Mike: Please note the views and opinions expressed by the individuals in this program do not necessarily reflect those of FlipNerd.com or any of its partners, advertisers or affiliates. Please consult professionals before making any investment or tax decisions, as real estate investing can be risky.