Saturday, May 27th, 2017

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Avoid This Huge Mistake With Private Money Lenders, Part 2

In part 1 of this article, we talked about the motives of money partners and how different they are. If you ignore that we all have different motives, you’ll miss a lot of prospective money partners and their money.

We also discussed the comm myth that, for your potential private money lenders, “it’s all about the ROI (return on investment).

Offering too high of returns can hurt your response.

At my first bootcamp on money partners, Joe Arlt shared his experience with some money partners that associated higher returns of 12-15% interest to more risk.

I’ve had the same experience. Some people don’t understand why you are offering such high returns and sometimes we shouldn’t.

You’ve been taught that you need to offer higher returns in order to attract money partners but that’s not true.

The premise behind this belief is that you have to “compete” with the banks by  offering higher – much higher – returns to convince people to invest with you and your company.

Not only do some prospects associate a higher risk because of the return but it raises red flags that it could be a scam.

AARP and state organizations are always offering seminars and programs to teach seniors to be aware of investment advisors offering “high returns with less risk”.

“Isn’t ‘high returns’ supposed to be your money partner sales pitch?”

Then your sales pitch may need an overhaul.

Try a different approach to appeal to their emotional triggers. Offer moderate returns instead of being over the top. And seek out more sophisticated investors.

Find out more at my Private Money Bootcamp. I’ll give you my exact system for using “emotional triggers” to attract money partners. When you use them, ROI becomes secondary.

My best to you,

Avoid This Huge Mistake With Private Money Lenders, Part 1
Matt Scott
PrivateMoneyEvent.com

About Matt Scott:
Avoid This Huge Mistake With Private Money Lenders, Part 1Matt Scott is the nation’s top-expert on raising funds for real estate ventures. OPM (Other People’s Money) is a key to his success in real estate and he’s discovered that in order to become successful partnering with others, you must have more than one size wrench in your toolbox. By expanding OPM well beyond what anyone else imagined, Matt has created an event based on his success using OPM.

Matt gave up his employee status in May 1994 and is a full-time real estate entrepreneur with a Bachelor Degree in Accounting. His experience in the CPA firm made him realize entrepreneurs and investors are the wealthy not only in assets but in lifestyle and freedom.

Need private money for your real estate deals?  Find out more about Matt’s next Private Money Event…

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About 

JP Moses is a roughly-hewn man-child who first got into REI after reading Rich Dad, Poor Dad back in Y2K and went full time in 2002. He's tinkered in everything from landlording to short sales to rehabs to Realtoring to REOs to notes to owner financing, blah, blah, blah...Till he finally stuck his flag deep into wholesaling and has since flipped somewhere north of a couple hundred deals.

JP's not a “guru” but also doesn't think it's a bad word. Among his core values are authenticity, creativity, big honkin' value, general fun-ness and being unshaven. He's super proud to be chief blogger guy at REItips.com and host of the free REIology podcast. He also thoroughly enjoys sharing his 53 best real estate investing forms with anyone who wants them. You should totally check that out. :-)

  • I like your angle. When I first bought Alan Cowgill’s course, I thought offering 15% was way too much so I backed mine down to 12%.

    That was my baseline for years and now a lot of my investor base is conditioned to make that much. Great tip!

    Patrick Riddle’s last blog post..Real Estate Investing Tips and Strategies: How to Combat the Shopper

  • I like your angle. When I first bought Alan Cowgill’s course, I thought offering 15% was way too much so I backed mine down to 12%.

    That was my baseline for years and now a lot of my investor base is conditioned to make that much. Great tip!

    Patrick Riddle’s last blog post..Real Estate Investing Tips and Strategies: How to Combat the Shopper

  • Great information! Offering more moderate returns and seeking out more sophisticated investors makes sense.

    Wade Fouts´s last blog post..5-year-old boy fatally shocked in Mishawaka – Chicago Tribune

  • Great information! Offering more moderate returns and seeking out more sophisticated investors makes sense.

    Wade Fouts´s last blog post..5-year-old boy fatally shocked in Mishawaka – Chicago Tribune

  • Same thing here. Although some folks like the idea of HYIP or making a high yield in a relatively short amount of time, experienced investors relate interest rate to risk. As a real estate investor, I'm much better off sitting down with a potential private lender, showing him/her what we do with both before and after pictures and numbers, and offering 10-12% (or 20% of the profit) rather than giving someone 20% or 50% as some REI's do.

  • RMM

    Thumbs down review:Matt Scott's Private Money Boot Camp

    I am a real estate investor in Phoenix where Matt Scott came to town in May 2010 with his Private Money Boot Camp. After hearing his speech/pep-talk about how he would teach me/you/anyone on how to legally/properly raise private money, I was jazzed to say the least.

    But, since I didn't have the almost $4,000.00 for his two day boot camp, I thought the next best thing would be to try and HIRE the people he was training.

    On May 2, 2010 I went to the place he was having his boot camp and tried to hand out my business cards to his students, telling them that once they were done with the class that I wanted to hire them.

    Almost immediately some snotty woman came up and demanded to know who I was and what I was doing. I responded by stating that I was looking to HIRE Matt's students and then asked, “Isn't that GOOD for YOUR business?”

    This snotty woman then actually started taking my business cards away from students and told me I couldn't hand them out and had to leave.

    What is Matt Scott so ashamed of that he doesn't want the people that spend almost $4,000.00 on his course to actually get hired to use what he teaches?????

  • Hi, RMM – I hear why you're frustrated, but I guess I can also see both sides of this.

    I used to run our local REIA group for years. And from time to time we would have folks come to our meetings and try to just stand at the door handing out their business cards to our members and attendees as they came in. It didn't add anything of value to our meeting, and really kind of ticked off our vendor members who has invested in a membership in order to be able to present their business offerings to our members. So we had a policy basically across the board that only approved vendor members could give out their materials to our folks at our meetings.

    Then I had this one lady who wanted to offer herself as a hard money lender and she kept putting her business cards on the table reserved for our vendor members. And I just picked up her stuff whenever I saw it and trashed it. Didn't make her happy…and she didn’t understand why, if her hard money could be useful to our members, she would be prohibited from sharing it. But the bottom line is, we worked hard and made noteworthy investments of both time and money to earn the respect and trust of our members…and to get them to attend our meetings…and for someone to show up and basically try to get a free ride off all our hard work and money invested just seems disrespectful and shady.

    Now I'm not saying you were being shady…nor am I saying it's an apples-to-apples comparison. But I'm sure whoever the lady was at Matt's event that you encountered was feeling similarly…cause from her perspective you just showed up out of now where, and started presenting cards to their paying attendees. And even though it may seem an innocent approach from your perspective, do you see how from their perspective it could seem as if you're wanting to benefit from the hard work, money and time they invested to get their students to attend their event? Or at the very least potentially cause some level of confusion and disruption to their meeting?

    You may not see it this way — if I were the offended party, I might not either. But I urge you to try and see it objectively. And I can assure you with near certainty that if you showed up at ANYONE'S meeting and wanted to pass out your business cards for ANY reason, you'd almost certainly be challenged, stopped and thwarted similarly.

    I'd also like to point out that your “thumbs down review” isn't really of Matt's bootcamp – which you didn't attend. But of your experience with his gatekeeper keeping you from soliciting their students on-site. There is a difference.

    Thanks for posting, and I hope you take this as a friendly rebuttal, as it's intended.

    My best,

    …jp