Recently in Getting Private Money in Michigan Category

Back in days I rented a 2 room office in Southfield around 10 and Southfield Road. It was a small building owned by a real estate millionaire dentist who also ran his practice out of there. It was an eclectic mix with a massage guy, mortgage company, property management company and bunch of other little businesses.

We all got to know each other and talked frequently to each other while crossing the hallway. Everybody liked my business of flipping foreclosures and I was always telling everybody that hey if you know someone who wants to buy a beautiful home in Detroit or wants to partner up with me - let me know.

Do you know what I heard the most in that building: "I wish I could do something with you but I got bad credit and all my clients have bad credit and none of us have any money?"

After couple of months of hearing this over and over again there was a part of me that actually started believing in this. I had been invited in a bubble at this office building and I was almost in.

Luckily for me by that time I had realized I am a boater (new immigrant joke; boater = off the boat... get it?) and I don't know anybody in Michigan so I got to go and put my mug shot in front of new people who might be interested in hearing more about flipping foreclosures in Michigan. I knew nothing about marketing or advertising just a common sense idea that instead of waiting for somebody to discover me in Southfield - why now show up instead of people who want to do something in Metro Detroit foreclosures?

So I ran some ads in Detroit News Real Estate Investing Section and I started getting phone calls. Within 2 weeks I was inside a bigger and much better looking world: people who had money to partner up with me AND had perfect credit. I swear when I asked so how is your credit (jaded person that I had become) I would get incredulous looks back as in: What a dumb question to ask... of course my credit is perfect; what else could it be?

Just because your best friend is going through some rough times in his financial life and your brother is not serious about keeping his credit score high... means absolutely nothing on what is happening in Michigan out there. Are there people with bad credit out there? Sure. Are there people out there who have no interest in investing in real estate and they rather invest in their 401K passively? Sure I have a good four dozen that I know very well.

See you don't get to choose parents, siblings, relatives, co-workers and even sometime friends. But we do have a choice in who we choose to surround ourselves and know well in our flipping business.

Don't lock yourself in one building like I almost did and think that is it. Know in your heart that there are a whole lot of people out there looking for somebody just like you to do business with. All you got to do is show up in front of them. No convincing required.

My third private investor who at that time made a whole lot more money than me was a very senior executive in the auto industry. One day we are hanging out having just come back from a closing from which he had gotten a very very nice check courtesy of yours truly and he looked at me and said, "Do you know how long I have been looking for somebody like you?"

Without missing a beat, I said, "I would guess all your life."

And he laughed and said, "Almost Mark almost."

Sit down somewhere quite in your home. Open up your laptop; log into Facebook; open up your email service or software (Gmail, Yahoo, Outlook Express etc); take a look, one by one at all of your Facebook Friends and every name in your email contact list and ask yourself these three questions:

1. What do these people do for a living?
   
   
2. Will any of these people might be interested in partnering up with me to do flips where they play bank and put up the money to buy and fix up the foreclosure whereas I will do all the work?
   
   
3. Who do these people might know that they have told me in passing?

Most new real estate investors in Michigan only think of 2 names when they start thinking about OPM: Mom and dad. And that is it. So if mom and dad have no interest in partnering up with you and mostly likely they don't. They still remember finding you in the backyard, covered in your vomit with an empty bottle of Jack Daniel when you were 19. Those memories never fade away and no matter how mature you are act up right now, they are still stuck up with that picture. So forget mom and dad. Don't even bother talking to them about investing in Michigan foreclosures because believe it or not we have a whole lot of people already in our lives that might be interested in playing the flipping game with us.

Best part about it all: you only need one.

Think about this for a second; your only target right now is to go and do one flip; get one check with your LLC's name on it. That is it. You are not worried about building an empire or getting an army of private investors who are completely in love with you. Right now, on our list is only one thing: get one person to partner up with us so we don't have to use any of our own money to do our first deal. That is it. No need to stress or bang your head against your keyboard.

Know that all of us like to play this game of 'woe is me because look everybody..... how helpless and without any resources I am.'  when it comes to OPM. It is your brain who does not want to change anything in your lives. It is THE RESISTANCE (read the terrific The War of Art by Steven Pressfield if you want to understand this better) that speaks to you in your head to keep you firmly grounded on where you are already stuck: in a dead end boring job that pays enough to pay the bills but never enough money to do the things you have always wanted to do in your life.

So as soon as you utter the words in your head, 'I need OPM to buy foreclosures in Royal Oak" it immediately tells you that you don't know anybody.

That is not true.

In your Facebook Friends list and in your email list, there are at least a dozen great people who will be very interested in talking to you and partnering up with you for OPM. There might be a professional in a private practice there or a Michigan small business owner who adjusted her business when recession started and now she is doing even better than ever or somebody who took a buyout from the Big 3 and is looking to put part of their portfolio in real estate to get good returns aside from whatever they are doing in the stock market.

There is ONE PERSON in your life already who has been thinking about doing real estate investing in Michigan for a while now and just don't know where to start. They don't have the knowledge or the time to put that wish into action. You do.

One of the ways new real estate investors in Michigan self sabotage their own path of OPM is they talk about it to people who are not 'right or ready' for that talk.

I have two good friends who have no money to put in real estate. I still cherish their friendship and every time we go out, we have a great time. Their lack of money is a personal choice. I am not bothered by it. We all live our lives by the choices we make or don't make. But I would never set myself up for disappointment and talk to them about OPM. It does not matter what my track record is or how money a potential deal can make both of us: their answer is simply NO because they don't have it and will never have the resources to do it. I also know couple of people who are extremely negative about anything to do besides putting their money in stocks in their 401K. Once again I like them personally but I would never bring up OPM with them. No point in talking and then hearing NO. Why create frustration? Instead I know who in my email list and in my cellphone contact list are the ones who I should be talking OPM to. 

You should too.

Make this list before you even look at any foreclosures in your target city. This is the first step toward putting an OPM machine up and running in your new real estate investing business in Michigan that will attract great OPM partners toward your business.

I went to a 'business lunch' on Friday to meet a new private investor who has been hounding me (it is always better when they are chasing you instead of the other way around) to do some business with me.

This by the way is how all of my business meetings about private money / private investors are setup. Food plus table. No other way.

It helps that I am incapable of  eating alone. I can actually tell you all the times I ate by myself last year: ONCE. That is how unusual for me is to eat by myself that I actually remember it when I do. Part of it comes from my mother who would not allow us to eat wherever we wanted. Nobody could open up the fridge and eat. There was a time for lunch and dinner and if you had class / late work then she actually sat with me and talked to me when I finally made my way to the dinner table no matter how late it was.

Anyhoo, so I went to the meeting and had some incredibly good food with him. We spent around 90 minute together without any interruptions. We talked about the food, my obsession in 2011 at discovering new dive restaurants in Metro Detroit and staying away from chain restaurants as much as I could, Rich Rodriguez, Kwame's ongoing troubles, NBA and why the 'old guys' at Spurs have a good chance of winning it all come June, iPad 2 and the iPhone coming to Verizon and about our kids.

Hold on, you might be thinking... did I forget to talk about real estate and private money - the reason I went to the meeting?

No I did not forget but to me it is always: 'get to know people first; let them know me second; good business happens on autopilot.' Unlike most people who go on business meeting determined to start and end the meeting solely talking about 'what they want?" - I am more interested in getting a new friend in my life then just a one selfish deal.

Finally we finished eating. The conversation was great filled with lot of laughter and good vibes. He asked me about the business at hand and how can he partner up with me. I told him exactly my terms. He said, consider it done. We shook hands and I left. 

The business part took around 10 minutes from start to finish in a 90 minute meeting plus when I left not only I had gotten everything I had came for but I also walked out with a new friend, somebody who is going to do a lot of deals for years to come.

Here is the BIG, BIG, BIG LESSON for new real estate investors in Michigan who get a little nervous when talking to people they have just met or people they already know about private money, self directed IRA's or deal partnerships:

Do you know what is the real collateral in all private money deals in Michigan? If you said the house that has the lien on it with the investor's name on it then you are 50% right.

The real collateral in all private money deals is always YOU.

This is the secret that the most successful real estate investors understand and the ones who wonder why private money continues to elude them in Michigan don't. 

So when you and I are meeting to arrange OPM for your deals, don't rely on an email, go to lunch with me or have a drink with me, tell me about yourself and talk to me like a human being. 

Don't think about how much money I have or whether you are going to say something wrong. Be yourself. I want do business with you otherwise why would I bother meeting with you? 

What I want to know more than the details about the property is whether I can trust you or not? You are my real collateral. So give me a chance, leave your nervousness at home and instead come and talk to me as you would to a good friend and let's have a good time. 

You will attract an enormous amount of OPM easily toward you if you understand this serest about private money.

Reminder: I am teaching a 2 day bootcamp on December 29 / 30 in Southfield. Only 3 seats left. 

Not only I am going to turn you into a razor sharp private money magnet in our 2 days together BUT I also got some extremely cool private investors coming to hang out with you on Sunday. These guys buy and sell Michigan foreclosures all the time but not as an investor only but more as private investors / financiers / deal partners. You will hear how they think, what they like and dislike from new real estate investors in Michigan. That alone is worth the price of admission as it will stop you from making costly mistakes in getting OPM on great terms in Michigan for all of your deals.

Got questions? Call Nora ASAP at 248-561-3535. I am only allowing 15 students and we only have 3 seats left so don't wait. Details & enrollment links are here. 

"You are not your mistakes." - Dr.Maxwell Maltz 

Almost 90% of the time at real estate networking events or at my seminars, somebody would approach me at a break and eagerly share a story about something that went wrong with them in the last 12 years in all its gruesome details. And that is all they are going to talk about during the entire conversation.

It is said that people who don't learn lessons from history are bound to repeat it. So I appreciate that you are not forgetting the mistake you made last time you were attempting something completely new on your own but as a Michigan real estate investor and as a new entrepreneur, you cannot obsess just all over mistakes. That is not healthy and done over and over again will rob you completely of your self confidence.

Sure you might have screwed up on one thing on your last deal that you could have done better but at the same time you probably did right on 12 other things. Why not talk about them also?

The first tip that an experienced recruiter will tell you that during a job interview you want to build upon your strengths and not your weakness. Nobody is perfect. Everybody makes mistakes. But you cannot teach yourself just to talk about them. If you are doing it over and over again; you are teaching yourself a certain way of talking and pretty soon that is the only way you would know.

If you and me just met and you feel that I might be completely open to partnering up with you and fund your deals for you; do you think it is a good idea to center the whole conversation about a contractor screw-up that you did six months ago? By all means talk about it but then also tell me the lesson you learned out if and the way you consistently find good deals and why you love this business so much. That to me makes for a good real estate investing conversation and it shows that you have grown as an investor and an entrepreneur. 

Misery might like company but it has no place in business conversations. I like many successful people I know in Michigan are simply bored by it. Successful people don't complain. They learn from their mistakes, move on and try not to repeat them. These are not just words but two different ways of living a life. Think about it next time you are talking to a potential deal partner.

What is the first thing a real estate agent will ask from you BEFORE they show you any houses or even email you any listings?

An approval letter from a mortgage broker to show you are qualified or if you are buying the house with cash then a current bank statement showing the money sitting in your bank account - also known as Proof of Funds in our world.

Proof of funds is the way real estate agents (whether they specialize in residential listings or bank foreclosures in Michigan) determine if you are serious (and will show up on closing with a check) about buying a home or just wasting their time.

If you are using private investors to fund your foreclosure purchases; whether they are partnering up with you on a deal partner basis or lending you money from their self directed IRA's (with a lien against the property) - you would still need a proof of funds from them before you can make offers on REO's in Michigan.

Many new real estate investors in Michigan feel mightly awkward here. They don't know how to tell their investor / partner that they need some 'proof' that they have money.

Here is a simple way to get it done: pick up the phone (don't email) and tell your private investor or deal partner that you need to immediately start making offers and the REO agents and banks require to see proof of funds especially when the deals are cash to insure that they are not wasting time so can they please fax or email you a current bank statement or the last quarterly IRA statement so you can fax it to the real estate agent.

That it is. Don't make a big deal about it. Be straight and tell them why you you need it. 99% of the time nobody is going to ask you anything but your fax number. For the remaining 1%, you can tell them to fax the bank or IRA statement directly to the realtor. Just make sure that you have the realtor fax or email handy with you when you are talking to them and also turn around and let the realtor know that what is coming to them and whose name is going to be under so they don't mistake it for junk and shred it.

That is it. Nothing hard. Just one phone call and you can start making offers.

You are sitting with your brother-in-law working very hard to convince him that he should invest in a deal with you. He has no idea about real estate investing, actually he has never even thought about buying foreclosures. He looks like he is about to throw up out of nervousness but he says, WHAT THE HELL... I will do a deal with you.

This is a bad check and you don't need it. If he is so nervous and shaky now when he is just talking to you; imagine how he is going to drive you nuts once you have bought the house and are fixing it. `

You need to be partnering up with people who are excited to buy a home with you in Michigan; have thought about buying and flipping foreclosures for a long time in Michigan but didn't because life and lack of time / skills got in their ways. There is no shortage of people like this in the Michigan City you live in right now. Plan on getting those partners in your life not the ones who are vomiting on your shoes on the day of the closing.

Lastly, be in the real estate investing business, not in the 'convincing' business. That is a tough business to be in. When somebody is telling me on how sick and tired they are of trying to convince dad to do investing with them; I always think to myself, what a waste of perfectly good 30 minutes. You are much better talking to somebody who is already half there and need to know more about you before making the jump along with you instead of wasting precious minutes talking to somebody who is never going to do deals with you.

You just closed a deal with OPM funds. The closer leaned forward and handed you two checks. One with your LLC name and the other with the name of your private investor. You leave the title company in Southfield and start driving to Troy where you are going to meet her and hand over the check. The idea is to meet over some celebratory drinks and some appetizers and tell her about the next deal you are already working on buying and see if she is interested if doing a sequel partnership again.

This is all good but you should also add 2 more things to this meeting:

1. There is a no better time to ask them, since you are handing a big fat check with their name, that if they can give you a written testimonial on how the deal played out for them. Also their permission to use their name and picture in this testimonial and their permission to use this testimonial on your website or promotional materials.

2. Irrespective of whether they say YES or NO to #1 - ask them if you can use them a reference for future private investors / deal partners in your Michigan deals. Tell them that you are not ditching them but as your business grows you will be needing more people to partner up with you and provide OPM and you want the new partners to have peace of mind that they are dealing with a professional real estate investor who is serious about making money in the business.

Most people are going to say YES to one option. You don't ask, you don't get. So you gotta ask both, one after another, as cordially as you can. Before you know it, you are going to have a stack of testimonials and a list of reference phone numbers.

There are more than one kind of assets in real estate investing and not all of them are made out of brick and mortar. These above 2: testimonials and trusted references are two of the biggest ones that very few real estate investors ever think about collecting. Big mistake for many. Very big opportunity for you to speed up your OPM hoard.