How To Ask Friends For Money: Real Estate Investing
If you are interested in investing as a group, you may be interested in learning how to ask friends for money for real estate investing. Investing as a group makes a lot of sense when you're not independently wealthy and without means to make a big investment solo. Although asking friends for investment money can seem tricky, there are ways that you can go about it to protect both you and your friend.
- Talk about the specific real estate investments that interests you. You will put yourself out there for nothing if your friend doesn't share the interest in the real estate investments that capture your interest. Talk about real estate in general, even before you speak about your own investment ambitions.
- Let your friend know you are seeking investment partners if he has first indicated an interest in the real estate investments. This leaves the window open for your friend to express an interest in being one of those partners without you directly having to ask. This may avoid some awkward moments. However, there are some friends who may not follow that you are opening the opportunity for investment partners socially.
- You want to establish that you value your friendship. You never want to throw a friendship under the bus for a potential real estate profit. Therefore, asking for friends to go into business with you--especially when the business is your idea, which can make you feel more responsible--is tricky. You want to handle it delicately. Preface any monetary requests with a clarification of the priorities of the relationship and how you plan to keep the friendship first.
- Let your friend know about the potential risks and the potential gains. Be up front and honest. The easiest way to lose a friend is to be dishonest and take advantage of the trust a friend places in you. Although an honest assessment of risks may convince many to avoid real estate investments, you'll get investors who are prepared for whatever comes when you level with potential investors and friends. You may want to sandwich the risks in between the honest potential for gains, but both things must be put out there up front and honestly.
- Be real about why you are choosing to pursue this investment. It's okay to get personal; they are your friends, after all. Whether you are seeking investments to pay for your kids' college tuition or for a bigger home or retirement plans, explaining your own motivations can really bring it home and remind others of what they might be able to do in their own lives with sound investments.
- Ask for exactly what you want. Don't overestimate or underestimate the investment amount you need from your friend. Lay it out there on the table.
- Make everything official. Have everything in writing. Although the temptation to simply make verbal agreements is strong among friends, you'll actually be preserving the friendship by doing things by the book. Let your friend know this, too. Express that you are thinking of the protection of everybody involved by having everything in writing, signed and authorized as you would do with any investor.
- Communicate openly with your friend as the process goes along. Let your friends know about ups and downs. Express what you are doing.
- Write a thank you note. Express your gratitude. Be a good friend in the business relationship, too. Be more considerate than ever. Be quick to say thank you and slow to place blame.