How would I find private investors for a real estate firm?

[redstar1324]

I know that large real estate firms use private investors. I want to just use banks but can't right now. How would I find them?

[Owen]

I know that large real estate firms use private investors. I want to just use banks but can't right now. How would I find them?

Google.com is your friend ;)

Contact them, schedule a meeting. Have a good pitch, and hope they accept you.

[Freelancier]

First of all, investors that don't know who you are going to ask: what successes in this industry have you had already? My guess from your postings is that you don't have a good answer. Then they'll want to know how much of your own money you're putting into this... and my guess from your postings is that you don't have a good answer there either.

Investors who do know you, you know them already, so you need to put together a plan for your business and then ask them.

[Harold Mansfield]

First of all, investors that don't know who you are going to ask: what successes in this industry have you had already? My guess from your postings is that you don't have a good answer. Then they'll want to know how much of your own money you're putting into this... and my guess from your postings is that you don't have a good answer there either.

Investors who do know you, you know them already, so you need to put together a plan for your business and then ask them.

This is your answer.

[Pfalcone]

Are you currently in business? Can you show 12months+ of bank statements providing proof of income? If this is the case, depending on how much money you're looking for, there are a few alternative lending options.

[redstar1324]

I registered the LLC in February. I would take out loans in my own name. I have a private lender for commercial loans that works on stated income, but I still have the problem of coming up with down payments.

[redstar1324]

Is there any way to buy houses or larger properties with 100% of the purchase being financed by the loan?

The only way I can think of is by a personal loan, but I am not including that.

[redstar1324]

What should I Google?

[Freelancier]

Not when you're just starting out, no. If you have no skin in the game, you aren't of interest to the lender, because they can buy the same property without you and not have you as an added risk.

[Harold Mansfield]

Merging this thread with another that you have open asking the same question about real estate loans and financing.

[redstar1324]

Yes, I have property management experience. Running a hotel is easy as hell. I know people that do it. I know all the laws. I don't need a degree in anything. Degrees are the most overrated things in the history of the world.

I could tell you about Einstein's Theory of Relativity, doesn't mean I need a degree in physics.

[Harold Mansfield]

Running a hotel is easy as hell. I know people that do it. I know all the laws. I don't need a degree in anything. Degrees are the most overrated things in the history of the world.

I could tell you about Einstein's Theory of Relativity, doesn't mean I need a degree in physics.

Just based on that response I honestly do not see anyone giving you a bunch of money to buy anything that they could just buy themselves without you.
The kind of investing you're looking for is less about the idea and more about the person. They want to know that you have the ability to not just recoup the investment, but make a profit. Anyone with money can buy a hotel. They don't need you, and they certainly aren't going to cut you in on the profits when you've invested nothing. If anything they'll make you an employee and hire a seasoned, experienced and proven hotel manager to run the operations.

In one paragraph you've just proved that you aren't ready to manage someone elses investment.

You've discounted having any real experience.
You've just insulted the person in front of you who probably has a degree, or a kid in college getting one.
You've just exclaimed that you know everything, something even the most seasoned entrepreneur would never say.
And then that last Einstein statement was really the sign of immaturity that doesn't impress anyone.

It's like you've just repeated a bunch of Rodney Dangerfield lines from 'Back to School'.

Sorry, but that's truth. I can't see anyone investing in you with that attitude about business and their money. It's already a pretty unrealistic stretch to begin with.

[Fulcrum]

Yes, I have property management experience.
So do I but I'd still contract that out to someone who does it daily. Especially if it's an open to the public commercial establishment.


Running a hotel is easy as hell. I know people that do it.
It is? That's news to me. Just because you have friends/acquaintances that make it look easy doesn't mean that it is.


I know all the laws.
No, you don't.


I don't need a degree in anything. Degrees are the most overrated things in the history of the world.
I both agree and disagree with this. I agree that you probably don't need a degree to invest in real estate. Many have done it without and many will continue to do it without one. Where I disagree with you is the statement "Degrees are the most overrated things in the history of the world". Some degrees are, but there is always a benefit to be found with formal education.


I could tell you about Einstein's Theory of Relativity, doesn't mean I need a degree in physics.
You got me beat there. In fact, you probably could tell me how to braze and grind carbide better than I do already - it's all physics anyhow.

[redstar1324]

Yes, I do know all the laws. I have spent 100s of hours in a law library. And anything I don't know, I can easily look up.

[Freelancier]

Yes, I do know all the laws. I have spent 100s of hours in a law library. And anything I don't know, I can easily look up.
Well, maybe you should spend more time figuring out how to make more money than you currently do, because if you want to invest in real estate, you're going to need cash and right now, you don't have that and you claim you can't earn it fast enough. So... maybe you've been spending time learning the wrong things for the future you want to create.

Or, maybe you really know everything you need to know and your lack of cash and cash flow is a sign that you're a success and we're all wrong about you. If that's the case, Mazel Tov! Good luck with your real estate investments.

[Business Attorney]

@redstar1324: Then you are obviously aware that any raising funds from private investors constitutes the sale of a security and is subject to both federal and state securities laws. Real estate investments are almost always structured to take advantage of exemptions from the registration requirements but are still subject to other provisions including the anti-fraud provisions and in most cases require that no "general advertising" be used to locate investors.

[Harold Mansfield]

Yes, I do know all the laws. I have spent 100s of hours in a law library. And anything I don't know, I can easily look up.

You sound strangely like a former member here. Actually you sound exactly like him.
Knows everything. Everything is easy.
Posting multiple threads with the same questions about real estate.
Referencing the law library as proof of your business savvy.
Even the "100's of hours" mention.

I've had this exact conversation before.

If I didn't know any better....

[Freelancier]

Mr. TheFrog is that you?!?

[redstar1324]

@redstar1324: Then you are obviously aware that any raising funds from private investors constitutes the sale of a security and is subject to both federal and state securities laws. Real estate investments are almost always structured to take advantage of exemptions from the registration requirements but are still subject to other provisions including the anti-fraud provisions and in most cases require that no "general advertising" be used to locate investors.

Can you cite the statute?

Which is why it would be better to go through a bank or credit union anyway.

[redstar1324]

Yea if I had a good job, I think I could be one of the richest people in the world in 10 years. This is where one of those "overrated" degrees comes in handy.

If I had the startup capital, I would invest in value-added investments, such as buying rundown apartment complexes and converting them to hotels (zoning permitted), or even just buying an old poorly-managed hotel and turning it into a nice hotel. Then, the investments would fund the down payments for future investments.

I took over management of an RV park on April 1st of this year. When I got there, it was at 75% occupancy and half the places didn't even have working smoke detectors. Now, it is fully up to code and at 100% occupancy and renting for more than it ever has.

[GoldenGateTradingPost]

Venture capitalists primarily invest in the person. What they will be looking for:

- your track record of success in the industry
- strong recommendations from your peers in the industry (other executives) that you know what you're doing, are trustworthy, prioritize success above all else
- a detailed, verifiable plan (be prepared to demonstrate that every number and assertion you include in the plan are accurate)

[Harold Mansfield]

Yea if I had a good job, I think I could be one of the richest people in the world in 10 years. This is where one of those "overrated" degrees comes in handy.


So then they aren't overrated, are they?

[redstar1324]

Only for job sake. Not for knowledge sake. I can tell you the history of the Ottoman Empire but I don't have a history degree, for example.

[redstar1324]

I could give them the numbers. Do they usually want part ownership or do they just loan like a bank? If so, how long are their loan terms usually and how do their interest rates compare to those of banks?

[redstar1324]

What about selling stock? Is that realistic?

[Harold Mansfield]

Only for job sake. Not for knowledge sake. I can tell you the history of the Ottoman Empire but I don't have a history degree, for example.
You're really not getting it.
If I were hiring an expert on the History of the Ottoman Empire, I'd hire the person with a degree over the person that tells me they don't need a degree and has no credentials in anything.

Regardless of all of your personal philosophies, the real world operates differently. You can be whoever you want when you're spending your own money, but when you are spending other people's money, that BS won't fly. They will laugh you out of their office.



I could give them the numbers. Do they usually want part ownership or do they just loan like a bank? If so, how long are their loan terms usually and how do their interest rates compare to those of banks?
No, if they're putting up all of the money they will retain FULL ownership. There is no scenario where a private investor puts up all of the money and you are a majority owner or even a partial owner when you don't bring any credentials to the table that make you necessary to it's success.


What about selling stock? Is that realistic?
Do you have any stock to sell?


Am I the only one who has full on Deja Vu here?

[redstar1324]

Which is what I said about for job sake. Okay so venture capital probably won't work. I could make stock, but I probably don't want to.

[Fulcrum]

Which is what I said about for job sake. Okay so venture capital probably won't work. I could make stock, but I probably don't want to.

How would you sell the stock and who would be your possible buyers?

[Paul]

As has been said many ways here you will not be able to “fund” ownership of anything with 100% investor money, real estate or anything else. HOWEVER, if you are slick, aggressive and smart you may be able to cobble together a deal to earn a finder’s fee or even some small equity position.

To even start to work with investors you need a “deal” to present. It doesn’t work the other way around unless you have a true track record of successful ventures. Investors will entertain legitimate deals, but they will not fund your dreams.