Private Money Partnering

Funding Fundamentals – The Money

Chapter E

Finding Money – Nontraditional Sources

What about some of the nontraditional sources of funds? Who else could be a partner with you on a deal?

Think about a contractor. Some contractors can work with you and not expect any money until you close on something. Or they can work a deal with you on labor costs later, perhaps after closing. Whenever anyone will lend money or resources to you, and you don't have to pull it out of your pocket, consider that as a wonderful asset, and one type of partner. Extended payments from a vendor is a great sources of capital for a small business. If you don't abuse your creditors, they will have an interest in your success.

I once had a house I was selling quickly, in “as-is” condition, to a resident buyer on a FHA loan. Everything went through underwriting fine, except that the appraiser wanted a new roof on it. I contacted a handyman and asked him if he could quickly put on a roof, I’d provide the materials through a credit card, and he’d be paid for his labor one week later, or when it closed. And that’s the way it worked.

Other contractors may finance the fix up costs for you, to be paid upon refinance. They charge a higher price, but it’s not your available cash that’s paying for fix up Anyone who has a vested interest in making a project happen, is willing to roll the dice with you, is really an investor of yours. They may want your future business, or they may need to keep their own employees working on something, in order to be able to keep them.

Other types of nontraditional lenders you may not have considered earlier might be those people in your direct circle of influence:

• Immediate family
• Other relatives
• Friends
• Fellow workers
• Fraternity brothers/Sorority sisters
• Acquaintances
• People on your Christmas card list
• Past or present employers/employees
• Customers
• Competitors
• Fellow church and synagogue members
• People with common interests or hobbies
• Parents of your children’s friends
• Referrals from everyone above

When you are first starting or before you have much experience, you need to get your experience in the cheapest possible way with the least risk. Your family will probably love you no matter what. And then the first time you do something well and go to church or anywhere and say, “I just did something great!” and people will look at you and say, “You did what?” Guaranteed. Everybody is interest in making money. People are fascinated by real estate. You'll hear them say that they've always wanted to do that. The reality is that although most people are not going to do it, they are fascinated by people who actually do.

I was talking with someone recently while playing bridge and mentioned that I buy houses at a discount and sell them for a profit. She mentioned that she owns a mobile home park titled to a corporation, which from time to time has short term funds for investing. So people have money, entities have money, companies or organizations have money, and many types of funding are available. What you can do and should do, if you’re looking for other people’s money to invest, is be aware of stretching your own comfort level in dealing with other people’s money and time. Debbie or Dan Has-A-Deal should always be looking for friendly money.

The more experience that you have, the more confidence you have both in finding deals and putting money together, then the more attractive you are going to be to everybody in your life, everybody in your day. It comes across whether or not you realize it. And remember the phrase, “Fake it until you make it”, very valid in any line of work.

When I approach people I tell them I am always looking for a good deal. You never know when something might come up. I may turn out to be a deal, or not, but I've told people that I buy houses at a discount and sell at a profit. People often ask which comes first, the deal or the partner relationship? For me they are happening at the same time, continually. When I look at a deal I think, “Great, this is going to be perfect for Jim, because he likes…”, and so I put it
together with Jim in mind, but Jim may or may not have funds at
the moment. I pretty much keep up with who has funds at the moment. If you put together a good deal, there are going to be other Jims and Marys available to work with you in a number of different ways.

How Much Does Money Cost - Chapter F