Successful house flipping guru Graeve shares his top 3 strategies for how to find real estate investors. He explains how you can make money with real estate regardless of your income or credit history.
You may feel that your current financial situation or credit rating prevents you from investing in real estate deals. The truth is that Graeve was once in the same position. He didn’t have money when he started out, but his personal experience proves that you can overcome barriers to entry.
Investors willing to fund real estate deals are the key to unlocking opportunities in real estate.
And investors are everywhere because they are looking for better returns than what a savings or retirement account can provide. They are out there bidding at foreclosure auctions, attending real estate investment seminars, and networking at investor and entrepreneur meetups.
They might be your friends, relatives, or colleagues.
They’re active at sites like Biggerpockets.com and even your local Craigslist.
You’ll have to network to find them, but identifying prospective investors is the easiest part. Convincing them to invest in your house flip is the hard part. In this video, Graeve explains 3 crucial steps for overcoming this challenge.
Educate yourself. Graeve voraciously studied 20 books on real estate. He also knocked on the doors of sellers to gain reliable insights into their needs and motivations. He attended countless networking events, and listened to every real estate podcast that he could find.
By informing himself as much as possible, he gained the knowledge to speak with confidence when he had meetings with investors.
Investors want to know that you know what you’re talking about. When you can show that you’re knowledgeable, you can convince them that their money is safe in your hands.
Be a source of added value. Be able to tell an investor about a new investment strategy or opportunity. Graeve recounts how he impressed his very first investor by explaining how lease options could be more profitable than rentals. This investor already owned 10 rental properties, but Graeve had a new idea that was worth getting excited about.
You’ll have to be excited about your ideas as well. Your excitement could inspire an investor’s excitement and result in funding for your house flip.
Your enthusiasm must be genuine to win over people’s hearts. Your desire to help them earn a good return on investment needs to be authentic. When people see that you’re happy to invest your time in building mutual success, they’ll feel more motivated to make an investment.
You must bring a deal to the table. You can’t talk about hypothetical deals with investors. They want to see real deals with concrete numbers that project good returns.
If you just talk in vague terms about how you could maybe flip a house someday, then you’ll come across as a time waster.
But, if you have a house under contract, then you can show an investor what’s compelling about your deal. You can prove your competence by explaining that you have a committed seller, a market analysis from a Realtor, and a contractor ready to rehab the property. With solid numbers showing something like a 20% return in 4 months, you have a much greater chance of winning over an investor.
2 Types of Investors
After laying out his strategy for wooing investors, Graeve discusses 2 broad categories of real estate investors. They are HARD MONEY LENDERS and PRIVATE MONEY LENDERS.
Hard money lenders operate everywhere. They are business people willing to lend you up to 70% of a house’s after repair value. They don’t care about your income or credit either.
Hard money lenders will charge much higher interest than a bank or mortgage lender. They want you to pay at least 2 points on the loan upfront and then make monthly interest payments.
You’ll also need to recruit one or more smaller investors to fund the rest of your rehab, but hard money lenders can give you a leg up when no one else can.
Private money lenders, on the other hand, are not as risky and can provide a smoother route to success. They will act more like a partner instead of a lender, which means you won’t have monthly payments while rehabbing a property. They are also likely to fund 100% of the purchase price and repair costs.
Joe Graeve and Chris Graeve wants to help anyone attracted to real estate investing and house flipping to find success.