How to Build Mutually Beneficial Relationships with Lenders and Investors

Have you ever heard the phrase ‘The king makes the rules’?

I’ve heard this used to describe people with money. Particularly lenders and investors.

If you experience this, let me clear. It’s a caustic relationship and you should find better partners.

Here’s the reality.

You need their money to grow your business.

But, they need YOUR expertise to grow or preserve their wealth.

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People with large sums of money can deposit that money in the bank. They can get a CD returning half of inflation. That means their money would loss value every year.

They know better than to do that.

They can invest in the stock market. If they invest in a market index, they will get average returns every year.

That may be adequate for them to preserve their wealth, but it would not grow it.

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If they want to grow their wealth, they need someone with a solid track record of success.

That’s where you come in.

Regardless of what you do.

You could be Elon Musk with a track record of growing successful billion-dollar businesses.

You could be a real estate investor with a track record of buying and managing real estate assets and providing solid returns for investors.

You could be a restaurant owner with a track record of starting numerous successful boutique restaurants, or a chain of restaurants.

You are the person that a wealthy person seeks to grow their wealth.

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Most people cannot do this.

The key phrase here is ‘track record.’

This takes time to develop. If you don’t have the track record yet, don’t worry. Keep working hard to build that reputation. You will get there.

If you have the track record already, understand that you bring lots of value to the table. You are a rare breed.

For you, money is a commodity.

You can have your choice of lenders and investors.

And believe me, they will seek you out.

Imagine if you had hundreds of millions in cash that you need to invest. You have the opportunity to invest in Elon Musk’s latest project – before anyone else has access? Would that opportunity be exciting?

You should feel fortunate to have that opportunity.

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Besides bringing a commodity to the table (cash), what else can a lender or investor offer?

The most important characteristic is the same characteristic they will seek from you.

A track record.

You want a lender who consistently delivers. They close every time, on time.

But, there is another characteristic of a lender or investor that makes them a great partner.

They bring connections.

These connections help you get access to opportunities that others cannot.

These are the aspects that set a money-partner apart from others.

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Imagine this scenario.

You are Elon Musk and you have an idea for developing an electric vehicle company.

You obviously have the track record of success in new businesses.

Let’s assume you have the technical expertise to develop, or manage the development, of the car.

But, you have never sold a car or built a car charging station. You need both of these for success.

You are approached by many investors for this project.

One investor happens to be a major auto manufacturer who will put your vehicles in all of their dealerships.

Another investor is a major gasoline supplier who will install a charging station in every one of their gas stations.

Another investor has lots of cash and will accept a lower return on their money than the first two want.

Do you see how uninspiring the last investor is?

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If you have a strong track record, it’s not a license to be arrogant or abusive to your lenders.

It should be symbiotic.

You deliver great returns as promised.

They deliver cash for your business growth as promised.

They deliver access to exclusive opportunities.

You deliver great returns for all such opportunities.

Together you will grow.

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We have some amazing relationships with investors and lenders.

As of the time of this writing, the market for real estate deals is tough.

Yet, our primary lender brought us the exclusive opportunity to buy multifamily properties at a profitable level. This opportunity leverages their extensive connections.

And, it’s not just one property. It’s virtually an unlimited supply of properties.

If you’ve looked at pricing on the open market, profitable multifamily opportunities are tough to find right now.

This is an amazing opportunity for us.

Our primary hard money lender has also brought us exclusive opportunities.

In one situation, he was lending on a project and the investor was failing. He offered the project to us.

The other investor lost about a hundred thousand dollars.

We saved the deal for our lender and we made lots of money in the process.

If you have these types of relationships, do everything you can to preserve them. They are gold - for both parties.

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We get approached by lenders and investors weekly trying to get our business.

They offer promises of lots of cash, or a low interest rate – lower than we are paying.

What they don’t offer is the opportunities that our lenders offer.

We aren’t interested in destroying great relationships to save money in the short-term.

Neither should you.

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Develop your track record of success so that money becomes a commodity for you.

Then, utilize your cash-partner relationships to help your business and your partners grow.

Happy Investing!