By Greg Herlean
Over the years, I’ve been on both sides of the investing table. I’ve been the one looking for money to invest in real estate with Mike, and I’ve been the one that others approached for investments. With so many years in finance and specifically in wealth accumulation, I’ve seen it all at one point or another. I’ve had investors tell me that I was crazy, and I’ve told entrepreneurs that I just couldn’t see the profitability in their proposals. As a result of years of these kinds of experiences in the real estate investment business, I’ve picked up on a few strategies for what to do when your investors say no.
Understand Why They Rejected Your Proposal
First of all, do you know why they said no? If they believe you are not experienced enough in the real estate investment business to handle a large flip, you’re looking at a very different situation than if they think that your flip is a dud in a dead market. In both cases, you have quite a few options, but you should make your next move based on the reality of the situation and why your investors rejected you. If you do, you’ll be more likely to get a yes at your next proposal.
Pay attention to what your investors say in their rejection. If they have recently made another investment and don’t have the liquid assets available right now for this investment, then you can move on to the next investor or lender. If they say that they don’t think you’ve properly researched the property, the market, or your rehab costs, then you need to go back to the drawing board.
Revise Your Presentation
If you’ve already done your homework, you’ll just need to revise your presentation and show your investors that you have all of the data they’re looking for. If you haven’t done your research, then take this as a learning opportunity. No investor is going to gamble on someone who hasn’t spent the time and effort to thoroughly research their investment, including how likely it is to succeed and what they’ll do if it fails. Always do your homework first and then put the effort in to show that you’ve done it and that you have considered every possibility and exit strategy for your property.
Know That “No” Isn’t Necessarily the End of the Conversation
After you’ve revised your presentation to show that you’ve done all of the appropriate research, along with how investing in your project will help your investors, don’t be afraid to ask them for another meeting. Don’t be pushy, but understand that “No” is rarely the final answer when asking for investing money. Be respectful and don’t badger your investors if they aren’t interested in meeting with you again, but don’t be afraid to try one more time.
Build Your Business With Hard Money Loans
Finally, if you’re having no luck with investing partners or private lenders, there’s nothing wrong with getting hard money loans for your first few flip properties. These will have high interest rates, so you’ll want to work fast to pay them off. However, if you keep track of each phase of the deals you do with these loans, you can use these projects as evidence of your capabilities when you ask for larger investments later with private lenders and investing partners.
In the real estate investment business, people are going to tell you no. It’s a fact of life, but it actually doesn’t have to be a negative thing at all. You can use every “No” you hear as constructive criticism and as a lesson for your next deal.