“
I can’t tell you how many times I have seen this play out with
my students. Properly documenting your past performance in your
Credibility Report will go a long way in securing new lenders.
pro-actively identify the barriers and
risks you may face and how you plan
on mitigating them.
Remember, by identifying this
upfront you will go a long way. Keep
in mind that most lenders (or their attorney) will inquire about risks anyway,
and it looks much better coming from
you without being asked. As part of
your business plan, you should have
identified all skill set shortfalls
you may have and include
a specific action plan on
overcoming the deficiency. If you are a
new investor with no
or limited experience, it is advisable
to have someone
who can shadow
your decisions and
path and guide you
along the way.
As a performance coach,
all too often I see new investors
jumping into their first project without
the proper skill foundation and many
experience some challenges that could
have been prevented.
Transparency
If there is one thing that can ruin any
business relationship is holding back information that is critical to your lender.
With real estate investing, things may
not always go to plan.
However, what is important here is
how and when you communicate when
there are challenges. Always share
information that affects your lenders
as soon as possible and during that
discussion, communicate possible ways
to get back on track and avoid a future
re-occurrence.
Credibility
In order for your business to grow and
continue to have your lenders coming
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back for more opportunities, it will be
critical to leverage off of the success of
prior projects. Once they see what you
can do and have performed as planned,
you will find that the people around you
will be literally throwing more money
your way. In addition, they will be ask-
ing if they can bring their family and
friends along as well. Talk about free
marketing, it doesn’t get any better than
that!
I can’t tell you how many times
I have seen this play out with my
students. Properly documenting your
past performance in your credibility
report will go a long way in securing
new lenders. As a great way to demonstrate your performance is to invite
your lenders and potential new lenders
to your projects both before you get
started with the project and after it is
completed.
During this time you can share with
them both the initial expectations and
how the final results compared. Just
think how powerful this can be. During
this exchange, if the specific performance you were planning was not comPAGE 48 • 2016
“
pletely achieved, you should elaborate
on the root cause. Evaluating lessons
learned can be a great way to mitigating
future errors on the next project.
Have an Exit
Strategy
As part of your overall project or
business plan, you may need to consider your exit strategy from the private
lender in advance of moving forward
with them. There are generally a
few options to consider when
exiting private money that
include:
• Selling the property
upon completion of a renovation, the lender will
be paid from the proceeds
(this is common with a
rehab and flip project).
• Refinance the property
with a cash out conventional
mortgage (this is very common on
a hold-to-rent property).
• Repaying the loan from the sale of
other assets or investment sources.
In conclusion, building a solid base
of reliable private lenders will help set
the stage for you to respond very quickly to the opportunities presented, This
can clearly be the path for you to scale
the business as large as you want! Once
the people in your network actually see
that you have the bandwidth to move
forward they will bring you even more
opportunities.
Carl Schiovone is a Performance Coach
with over 33 years of experience and is
President of Carl Schiovone & Associates Real Estate Coaching Inc. In addition Carl is the President of East Coast
Real Estate Investors Associa tion. For
information, visit http://EastCoastREIA.
net or http://CarlSchiovone.com
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