How to Convert Cash Buyers to Private Lenders

June 1, 2015 | By | Reply More

2015-6-1-260All rightie, folks. Patrick here. Today we are answering the popular question:

How do you convert cash buyers to private lenders?

To do that, we first need to talk about and answer this question:

Would a cash buyer potentially be a good source of private money?

And, from my experience, the answer is a resounding YES!

Cash buyers and diversity

Too many times investors don’t ask themselves, “What’s a cash buyer?” A cash buyer is simply an investor who’s buying deals. And, guess what? Many times, investors who are buying deals and have cash, may not currently have a deal. But, they would love to put that cash to work.

And also, many times, it can make sense for an investor to diversify, and not just buy real estate as an owner, but lend against real estate and be in the lender position. That’s kind of a good way to diversify and make money in multiple ways through investing.

One of my first private lenders was actually an active investor. He was at our local REIA – Real Estate Investment Association meeting. And, he had some extra cash on the side…

I showed him a deal in Goose Creek that we had under contract. It was a really good deal. And, he put up the funds to pay for the purchase price; the rehab holding costs; basically all costs associated with the deal. I didn’t come out-of-pocket one cent. All of this was just because I met this active investor (who’s also a cash buyer), who had some extra cash – and I simply showed him an opportunity. Win/win!

A lot of times, your cash buyers are actively seeking opportunities to act as a short-term private lender on the right deals. So, it’s not even a matter of you trying to convince them to do it. They’re out there. They’ve got their periscope up, and they’re looking to buy and rehab houses all day long.

But, they also have a self-directed IRA. And, they can’t buy their own deals in their self-directed IRA. They need to leverage other investors’ deals, and use the funds that they have in their self-directed IRA. They’re hungry and eager to do so. They need these types of opportunities. So, it may as well be your deal that scratches their IRA’s back. See what I mean?!

Automated strategies for cash buyers

Okay, so now onto hands-off automated strategies to convert cash buyers into private lenders.

Basically, what these strategies do is get your cash buyers to raise their hand, and show interest in private lending opportunities.

2015-6-1-questionOne way is during your qualifying process with the cash buyer. You know, maybe you just use a cash buyer questionnaire form to qualify them and ask questions to your buyer. You could just simply add a question in there on your form during the conversation: “Are you interested in private learning opportunities as well?” It could be as simple as just asking the question.

To automate that, if you’ve got a website where you’re building your buyer’s list, and you have a form on your website, just add an additional question to that form that is a simple as what I just mentioned.

You know, “Are you interested in private lending opportunities as well?” Then, you can have it where they can just click that box as ‘Yes’ or input a space for them to write their information… and not only do you collect their information as a cash buyer lead, but now you have an indication that they’re interested in hearing about private lending opportunities.

Another automated way is if you were building a buyer’s list online through your website, and have an autoresponder service tied to your website. Then, in your autoresponder, you can simply plug in an email that’s automatically sent to every cash buyer that comes through your webpage that simply asks them that question:

“Hey, I know you’re interested in buying properties and good deals. Are you also potentially interested in a private lending opportunity? If so, hit reply and we’ll go from there.”


“… Then, we’ll talk for more details.”

See… that’s two easy things that you can do on your website – include an extra question when your cash buyers are filling out a form or in your autoresponder, send them a specific email to get them to raise that hand for you.

Today’s takeaway

So the bottom line is always keep your eyes open and have your business set up in a way that you don’t miss out on potential opportunities. Ask questions and get answers. Sometimes the cash is right under our noses.

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What experiences can you guys share when it comes to cash buyers? Join in the conversation below!

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Category: Fix & Flip, Private Lenders

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