Funding Your Deals:
The Secret is in the Bank Book
Funding deals is fundamental and if you can’t do that, you cant do business. One of the most important tools you will put together for your real estate investment business is what I like to call your Bank Book.
The Real Estate Investor’s Bank Book is a three ring binder that must be created and updated regularly. It tells a money lenders, both private and commercial, exactly who you are and why they should fund your deals.
When you work with a money lender, you’ll always bring your Bank Book with you and leave them a copy; two or more if they need it. What that means is that once you’ve got your original copy together, you’ll make up several of them to have on hand when seeking funding for your deals.
How it is Done
The following is a comprehensive list of everything that should go into your Bank Book.
1. Personal Mission statement and Goals:
People want to know who they are doing business with. Your personal mission statement is a statement written about you, by you. In it, you will cover your personal as well as professional goals . In addition to writing down your goals and aspirations, you will tell where you’ve been and what you’ve experienced in life and in business. You may think this is a waste of time, but trust me when I say they will read it. After all, would you give money to just anybody?
2. Current Business Plan:
Lenders like to know what your business plan is and how you will use their money; the bottom line is they want to know how they are going to get it back with a return on their investment. When you present a clear business plan, keep it short but succinct.
3. Resume and Professional Team:
Your resume should be up to date and included in your Bank Book. In addition to your own resume, you should include a comprehensive executive summary which tells lenders who the executives in your company are and what they can bring to the table in terms of experience and business acumen.
4. Your professional Team and Personal Advisors:
Your CPA, Your tax advisor, your coach or mentor and your business partner are all people who should be highlighted in this section. Lenders are in apposition to lend because they’ve seen some success. Most successful people understand that success seeks assistance and support.
5. Financial Statement:
A very important part of your book, your financial statement says a lot about your financial stability and how you handle money. Lenders want to know that information. Once your lenders have your book on hand, you can simply email them updates to ad to your book for future reference on other deals.
6. Credit Report:
Having your credit report already printed out and included in your book tells your lender that you are serious about your credit. You know where your strengths and your weaknesses are and you know if improvements need to be made. Banks and private moneylenders alike will find this impressive and they will appreciate the effort you put into getting the information in their hands from the get go.
7. Two Years of Tax Returns:
Include last year’s tax return and the year prior to that. Banks will generally email you once a year to ask for updates; try to be proactive by sending them along before asked.
8. Supplemental Information:
A. Copies of leases, contracts and forms
D. Business articles
Putting it Together
Once you’ve compiled all the information suggested above, put it together in a nice three ring binder; use the kind that lays flat when you open it up. Stay away from white or black; stand out from the crowd by using a sober, professional, color like navy blue, dark green or maroon. Don’t forget to place a nice color cover page on it and utilize Avery tab inserts to divide the contents. Trust me when I say that if you do this and do it right, your application will land on top every time.
For more information and details about the all important Real Estate Investor’s Bank Book, check out the Funding Your Deals section of your S.M.A.R.T Real Estate Training guide.