REI Essentials: Targeting Cash Buyers & Private Lenders
“Cash rules everything around me… dollah, dollah bills, y’all….”
Believe it or not, this super white boy knows (and loves) the Wu-Tang. And they said it best. Cash money rules. Ain’t that the truth?!
And in order to make that cash money, you need to target cash buyers and private lenders. But we’ll get to that in a hot second.
So far in my REI Essentials series, we’ve been talking about making some tough marketing decisions to get your business off the ground, and here’s hoping that after my last post, you’re working those direct mail leads like the skilled and stealthy ninja investor you’ve become!
Now, let’s jump back to those cash buyers and private lenders…
Who Are Those Guys, Anyway
Landlords or rehabbers looking for deals to make money, for example, are cash buyers. They could be part timers or 24/7 professionals who – simply put – have cash to burn. You want these guys… no, you need these guys on your side to make money in this business.
And the way to a cash buyer’s heart is with this simple formula:
Cash + Actively Investing = Potential Deal
Got it? Good. Because you need to know this formula if you’re going to successfully work with cash buyers who (btw) will only know you exist if you reach out to them.
And before you reach out to them, you need to understand the cash buyers, by nature, are going to be skeptical. They’ve been approached and pitched to more times than you can imagine, so you need to prove to them that you won’t waste their time.
Push the Perceived Benefits
You need to sell them on the perceived benefits of working with you.
Cash buyers need to fully grasp how working with you will benefit them. Here are some potential reasons why:
- You can bring them deals with deep discounts
- You will do all the heavy lifting for them
- You will (in theory) make properties magically appear
- You will prove to them that you’re skilled and strategic in your processes
- You will make the transactions simple and seamless
- They can leverage your time and resources
- You are doing them a great service
- They will receive higher, secure returns
- You will accept any price range
Prove to your cash buyers that you’re all this and a bag of chips, and you’re in.
Remember that the tipping point – that time when your buyer finally takes action – happens when he or she realizes that the benefit of working with you is far greater than the time and money he/she would need to personally invest.
Understand that these perceived benefits are also logical benefits, which are the selling points that you want to push through your marketing and advertising. Speak directly to your cash buyers’ logical needs, then transition to their emotional needs once you have them on the phone.
Yes, You Do Know Private Lenders
You’re grounded, right now, if you say one more time that you don’t know any private lenders…
I promise that you do!
Someone, somewhere in your world – right now – has what we call “lazy money,” which simply means money sitting in a bank account. Or ‘mattress money,’ which is cash someone has, that for whatever reason, is just lying around. The only way you’re going to find out who has the cash is to speak up.
Look, I was nervous when I first started in this business. I was terrified to ask people for money. I mean, talk about an uncomfortable conversation, right? But in time, I realized that I didn’t have to ask for the money. In fact, I shouldn’t (like, ever) ask for the money.
Instead, I offered those around me opportunities, chances to change their lives for the better.
And the tables started to turn.
Not to throw more math equations your way, but this one too is simple (so suck it up). Remember this formula for finding financial friends (nice alliteration, huh?)
Lazy money + Need for Better Return = Potential Deal
Learn it, because you’re gonna love it.
I sure as heck do! Know why? I raised my first million from a guy I hired to drive properties for me. He was making peanuts and he had a family to support. So curiosity got the best of me, and one day I asked him how the heck he was able to survive on such little pay.
From there, I learned that he was a trust fund kid (and that had I never asked, I never would have known). Then I thought, “The worst he can say is no,” so I asked him if he was interested in making some returns… and would he lend me some money.
Just like that, I had a check for $1 million in my hand.
Not even kidding.
All I had to do was ask about his financial situation, and then ask if he wanted to do some business together.
And the rest, as they say, is history.
It All Boils Down to This
Both cash buyers and private lenders need to understand and feel the perceived benefits (listed above) of working with you.
Remember that those buyers and lenders will only take action once you’ve established a relationship with them and built trust. Then, they need to experience that moment of clarity when they realize that working with you means opportunity not risk.
And don’t forget about effective marketing. Be sure to eliminate the negatives and reinforce the positives in all your marketing materials and push the perceived logical benefits, so that when the phone rings (and it will ring), you can play to the emotional benefits of your buyers and lenders.