I believe we all need to improve our businesses. The only way to do this is intentional reflection and forensic analysis. We all can learn a better way to look at our business to stay on top of our game. The best example of this was back in 2000 when the market opened up and anyone who had credit could get into a house. I was using an old business model to screen tenants and respond to inquiries about my properties. I had to make a change quickly because the vacancies lasted longer than needed. I learned the lesson to stay on top of the market. If you become complacent your business will drop off.
In the last article, I wrote about sitting at the table with two sellers and working to get them to finance their house so I could renovate it. Then I would pay off the mortgage. It was a buy, fix, and sell. I will be using poetic license in referring to the “lender” as owner financing / private lending/ hard money.
In this article, I will recap and explain areas I would change all future money presentations and ways to improve any presentation for the next time:
Drill into the motivation by asking a similar question 3 different ways. Drill into their concerns and find out what are their real needs.
Spend time getting to know the interests and dreams of the lenders.
Share your experiences and values.
Discuss what will make or break the deal.
Do they have all their current assets in traditional vehicle vs non-traditional ones?
After we have covered all their concerns and we can meet the needs of the prospective lender, then we will allow a win-win for all.
I have been on both sides of the borrowing and lending on the same day. I have a clear picture of the way lenders want to be treated. They want to know the money will be paid back. They want to know they will not lose their money. They want to see that they will come out better in the long run if they can delay their gratification for a short period of time. Make sure the conversation is clear and the roles are spelled out for the people in the transaction. If you are pitching a loan to a lender but the borrower is someone else, you need to make this clear. If you are the one borrowing the funds for an investment then you will want to make that very clear. When we are going to borrow the money from a lender, then loan it back out at a higher rate, this needs to be spelled out. We need to be able to make sure that the potential client understands the information we are giving them and that this information is what they care about.
I have been in a few “asking for money presentations” in which the only concern is the interest rate the lender will get back. Once that was established the conversation ended. This is a best case scenario, but does not happen often. Most lenders want a whole lot more data.
If all we talk about is our experience and how great we are, the lender will quickly move onto other avenues. I believe that borrowers bring baggage into the relationship. There will be changes and situations which will come up so the relationship should be one of communication. The borrowers believe they are paying too much for the opportunity and, they are not paying too much because the lender is taking a significant risk on the borrower. This is a partnership. Each brings their resources to the table. If one doesn’t have the right resources then the transaction will not take place. When the lender doesn’t get their needs met the opportunity will disappear.
Improving your presentation skills takes careful reflection, learning from your past experiences, and seeking best practices from those in the industry who have a lot of experience and success.