2 Solutions for Handling the #1 Objection from Private Money Lenders
Has it been challenging for you to get private money for your real estate deals?
After all, it can be so easy to stumble or just freeze up altogether when you get hit in the face by their #1 question:
“Have you ever done this before? Have you done a deal?”
But wait…don’t panic! Keep reading, because I’m about to share why this simply question can so often tangle you up. And even better, I'm going to help you out by sharing exactly how I handled this question successfully back when I was “wet behind the ears” as an investor.
And let me just say – you’re not alone. Over my years in this, I've found that sooooooo many investors commonly have difficulty landing secure, stable private money, and especially if you're a greenhorn newer to the game.
Here’s why, plain and simple…
It’s a credibility issue.
In other words, the people you view as potential private lenders just don’t believe you’re going to do what you say you’re going to do because of your lack of investing experience. It's just the something you'll have to face head-on that private lender prospects will likely feel squeemish about lending to you if they suspect you haven’t done your fist deal yet.
So today, I’m going to tell you how to handle the #1 objection you’re going to face when you start talking to private lenders – so you can turn the corner and get that critical private money.
So first, I made you a fancy video talking frankly all about it. Check it out…
Video Transcription:
If you don't have access to private money, I'm about to share the number one objection you face and how you can easily and effortlessly handle it once and for all. Hey, this is Patrick Riddle with Awesome REI. The reason why you and many investors out there can't get private money, are you ready for it? It's because your private lender prospects don't believe you're going to do what you say you're going to do. It's that simple.
It's a credibility issue and I know that for many of you out there, you're just getting started. You've never done a deal, or maybe you've done a few wholesale deals but have never borrowed money from a private lender. How are you going to answer the inevitable question? Have you done this before so that your perspective lender walks away thinking of you as trustworthy? Even if you're a newbie, I'm going to share two principles with you and this is advanced stuff, so pay close attention.
These principles are going to allow you to combat this objection and build massive credibility so that you instill confidence in your lenders so that they believe you're going to do what you say. The first principle you're going to use is the principle of association.
Now, whether you like it or not, people judge you based on who you associate with or based on who they perceive you associate with. What we're going to do is leverage your REI team to help build massive credibility for you. Some of your real estate investing team members, like your real estate agent, mortgage broker, whoever's doing your closings, whether it's an attorney or title company, appraiser contract.
Okay, so for example, my closing attorney, we use attorneys in South Carolina to close transactions has been in business for over 20 years. I communicate that with my potential lenders when telling them about my team and what does that do for me? Huge credibility boost.
Also, when you're talking with people about your investment opportunities, instead of saying, me and my and I use the word we, that will automatically communicate that it's more than just you running the show. You've got a team of experts at your back.
Okay, next we're going to use the principle of Aikido. Aikido is a Japanese form of martial arts. The idea is for you to go with your opponent's force rather than against it, and we're going to use this principle to combat the big objection when someone asks you, have you done this before? When someone asked that they're directing all their momentum and force at you, the person individually.
What we want to do is go with their momentum, but redirect it away from us, the individual and towards the property, which is the actual security that gives comfort to the private lender in a transaction like this.
So, we're going to take all the focus off of us, the individual and redirect that towards the property.
So, for an example, when someone asks you the question, have you done this before? You could say, well no, I'm newer to real estate investing. Most of my team has been active in the real estate industry for many years that, for instance, my attorney handling our closings has been in business for over 20 years. Our main contractor has been servicing the local community for well over a decade.
We really believe in leveraging the expertise of others, whether it's our real estate agent, mortgage broker, appraiser, whoever, and I want to make sure that you understand though, that ultimately your security and opportunity like this is the property that we purchase with your funds, which you will have a chance to okay and review all the numbers and information before saying yes and getting started with us.
So, there you go. Now you know how to handle most effectively that biggest objection you're going to face if you're new to private money, the principle of association, the principle of an Aikido… put those to work for you. If you have any questions, we're here for you 100 percent. Just toss your questions in the common area. All right, I'm out of here. Have a good one and we'll see you again soon.
Basically…
I’m sharing 2 game-changing principles here…
These will help you combat an objection from a private lender prospect and position yourself as highly credible, while at the same time instilling confidence in your lender so they believe you’re going to do what you say you’re going to do.
I’m also giving you 2 mini-scripts to follow that I've used successfully myself, so you know exactly what to say.
This is powerful stuff…
#1 Principle of Association
Whether you like it or not, people will judge you based on who you associate with or who they perceive you’re associating with. It’s just human nature.
So it's not just you standing there solo…it's you plus your formidable team of Avengers REI Power Players you're standing alongside and in who's company you fit so snugly. By intentionally leveraging their strength and track record, you earn massive credibility by association.
These are people like your:
⇢ Real Estate Broker
⇢ Mortgage Broker
⇢ Closing Attorney or Title Company
⇢ Appraiser
⇢ Contractor
You’re going to leverage these team members’ experience and expertise. Any time you’re talking to a private lender prospect or presenting your private lender PowerPoint presentation, you can include information about your team members.
Here’s what I mean…
The closing attorney on my power team has been in business for over 20 years, so I make sure to communicate that with my lenders.
What does that do for me?
Well, his long-time business experience boosts my credibility by association and work partnership.
And make sure you say things like, “we” and “our team” and “us.” Stay away from “I” and “me.” Heck, that may even help direct the conversation…
You: “We have a wonderful opportunity that might be great for you…”
Them: “Cool! But what do you mean, ‘we?’ ”
You: “Well, I’m glad you asked. Having recently launched my investing business, I’ve taken the steps to assemble an incredibly skilled and experienced team of pros, including…”
And just like that, you’ve easily introduced the highly effective Principle of Association. You may be a greener investor, but if you're using such an experienced, crackerjack team, you must know what you're doing, right?
Confidence instilled. Let's take it to another level with…
#2 Principle of Aikido
I know what you’re thinking – Patrick – you’ve lost of it. You have gone off the deep end, brother.
But go with me on this…
As you might know, aikido is a Japanese form of martial arts. The idea of aikido is to go with your opponent’s force – so when they come at you, you move with them instead of coming back at them, opposing their force.
So we’re going to apply this idea when a lender asks you: Have you even done a deal before?
See, when a prospect asks that question, they’re directing all their momentum and force at you. So you want to go with that force and redirect that momentum toward the property – away from you. And discussing the property actually gives the lender comfort, because it’s their security in this type of transaction.
So, the conversation could go like this…
Them: “Have you done a deal before?”
You: “No, I’m a newer investor, new to real estate investing. I’ve been building my business and my experienced team. Look, I want to make sure that you understand, though, that ultimately, your security and your comfort in the transaction is this property – this great opportunity I have for you, which you’ll have a chance to okay and you’ll be able to review all the numbers and information before saying ‘yes’ and getting started with us.”
See how I not only redirected the conversation, but I also dropped in there the Principle of Association. Who doesn’t love a twofer?!
Using the Principle of Aikido and wording your message this way allows you to successfully move the focus from you to the property.
Take Action
So there you have it…
Implementing these 2 powerful principles will help you build massive credibility. If you haven’t done a deal before, these principles will help you handle that likely objection from a private money prospect.
Put these ideas to work for you, and I know they’ll serve you awesomely.
Final Note
Do you still need private lender prospects? Click here to find local private lenders in minutes right from your computer.
I’m Listening…
Got a question or comment? Hit me up in the comments section below. I'm here.
This is fantastic advise. Thanks a million Patrick!
still looking forward to getting the deal,
Thanks for this great info!
Also, I liked the line “it’s you plus your formidable team.”
Patrick, you always make the most complicated task seem so simple to do. Thanks for the advice and information. You are the man!
I have completed 9 Re-habs over the last couple of years. I haven’t had any problems with getting $$. I have only borrowed funds for Purchase. I have always used my own funds for the Remodel. Cuts the time in half. I have my last property in Escrow. I finished it before leaving Calif. to Move to Hawaii. My background started as a Architect. I got both “A” Engineering and “B” General Contractors Lic.
I currently live on the Island of Hawaii. There are many vacant houses here. All I need help with is finding the Owners, and purchase funds. My last deal was @ 5%.
I can get funds at my bank @ 4%, but it takes too much time.
This information was awesome. Great way to deflect, adapt, overcome and improvise.
Thank you Patrick, this is awesome! It gives me more confidence to go out and talk to private lenders
Great advice Patrick. It all make great sense. Thank you.
It makes a lot of sense to look into redirecting momentum of a question back. I like the analogy that you made with aikido in this sense. As I continue to research hard money loans, I will be sure to keep this in mind for the best results possible.
Great tips Patrick, more tools for the tool box.
Hi Patrick, is it common practice for HML to ask a filing fee up front. If so, what is the general cost? Thanks
Hey Bill, no that is NOT common practice. You should never have to pay anything upfront. Any costs associated with private money or hard money should be handled at closing.
– Patrick
Do most private lenders require you to put some of your own cash into the deal because I don’t have any yet?
Good question, Donna. It depends on the lender.
Most private lenders (and hard money lenders) I’ve worked with loan ALL of the money needed to do the deal (purchase price, rehab, holding costs, etc). You may find a lender who wants you to put some skin in the game. If that’s the case, just move on the next lender… or wholesale some deals first to build up some cash reserves.
When you have a property under contract far enough under value though, there are private lenders who will fund 100% of what you need.
– Patrick
Awesome! I love these little tid-bits and tips on how to communicate effectively to control the conversation. I really like the “we” part and using Aikido to shift the focus to the project.
Glad you enjoyed!
– Patrick
Awsome strategies for obtaining PM. I was wondering about handling objections and this will do the trick.
Patrick, I have just read the objections that private money lenders may have given that I’ve never done a deal before. After some practice, I believe I’ll have the confidence to move forward with contacting private money lenders. thanks
Hey Robin, love hearing that now you have the confidence to move forward.
Go get ’em!
– Patrick
hi. my name is Philip cross ,please contact me thank you
This video and information was truly inspiring and very helpful, thank you.
Awesome, glad to hear!
– Patrick
Hello! Thanks for sending your info to me. I’m desperately trying to get financing for a multiple 4 plex project in Mesa, Arizona. I have been flipping for 25 years, now i wholesale and doing OK but want to get back to building 4 plexus. Can you direct me, willing to partner up or whatever. I’m a licenced Contractor and have been for 35 years.
Thanks much for your E-Mails.
Gary
Hi Patrick your right on time with this advice. Great strategy! Thanks for sharing. I say wow! here is a chance for newbies to have success with PML’S.
10 hour wholesaler
Thanks Patrick I think you are awesome!!
Thanks for posting-
Cheers-
Hi, I’m interested in private money lender.
Oh. Ok.
It’s all about value… and trust me when I say this… you all definitely add value. Advice like this can truly make or break a new relationship. Great advice!
Hey Curtis, glad you enjoyed.
– Patrick
Great info! Still looking forward to MY first deal…confidence is everything when your “new”! Thanks Patrick
Hey Bert, keep pushing forward and make that first deal happen. You can do it!
– Patrick
I have tried to get private money before but it has been unavailable for Canadian citizens even with a US property purchase to anchor the loan, has this changed and can Canadians now get private money for US property purchases
Hey Yusuf, check out some of Julie Broad’s info and training. She’s in Canada and has used a lot of private money in her deals over the years.
– Patrick