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Which Comes First, the Money or the Deal?

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Overcoming the “We have no money!” dilemma

Many years ago, when we were just starting our careers as investors, Robert and I lived in Oregon. At the time, we had very little money and paying our bills each month was an adventure in itself!

One afternoon, we returned from a business trip to Australia. As our suitcases hit the floor, the phone rang. It was our real estate broker saying we had a one-hour window to look at a 12-unit apartment building he had just listed. If he didn’t hear from us, he’d offer it to the next investor on his list.

Coming off 24 hours of travel, we were exhausted, but we didn’t want to pass up this opportunity.

“I’ll go check it out,” Robert said.

I still remember the words I yelled out as Robert was getting into the car, “Don’t buy it!”

So, of course he did.

We don’t have the money

When Robert told me he bought the building, my mouth dropped to the floor. “We don’t have the money,” I exclaimed.

Robert went on to explain it didn’t matter. If we couldn’t come up with the money, we didn’t have to buy the building. We had a two week window to do all our due diligence, including looking at the financials. If we didn’t like what we saw, we could walk away. That also meant we had two weeks to come up with the money.

“I’m in!”

When we got the financial information, we sent it to a good friend who was a successful real estate investor. After looking at the numbers, he called to let us know that he was in for half of the $50,000 down payment needed.

This meant he would also own half the investment.

“Great!” Robert said. “I’ll call you tomorrow with more information.”

All in

We were driving when we got Drew’s call, and when he said he was in, something peculiar came over me—a feeling of exhilaration.

Turning to Robert, I said, “If Drew, whose whole life is real estate investing, thinks this is a hot deal, then it must be good.”

Robert agreed, and then, grinning, I looked at him and said, “Let’s do it ourselves. Let’s go all in. Let’s own a hundred percent!”

It was scary to think of. If we did this we were back to square one, needing to raise the full $50,000 ourselves…and we didn’t have any money. But we knew we needed to go for it.

The great money hunt

In the following weeks, we went from bank to bank, each time being rejected. We approached people we knew who might loan us money at a reasonable rate with no luck.

We went through our finances with a fine-tooth comb and were able to come up with a small amount of money. And finally, we turned to our business and came up with some new ideas that would generate additional sales immediately.

With only three days left, we were able to scrounge up $25,000—right where we were before with our investor friend!

As a last ditch effort, we approached one last bank, and just when we thought all hope was gone, James the bank manager congratulated us.

“You got the loan,” he said. “The property makes sense. Plus, I’ve met you two a few times and I can see how committed you are to your business. I trust you’re going to be as committed to your investments. Good luck.”

We had all the money.

No money? No problem.

Most people say, “First, I’ll get the money. Then, I’ll buy the investment.” Instead, I’ve learned to say, “First, I’ll find the investment, then I’ll get the money.”

If you want to become an investor, I encourage you today to start looking at deals. Trust that the money will follow. And if it doesn’t right away, you’ve lost nothing and earned more knowledge for the next deal. It’s a win either way.

Just remember: No money? No problem.

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Original publish date: August 14, 2014

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