Have a deal on the table of two 10 unit apartment complexes. Both are selling for 700 thousand. Looking to raise private money for the deal. I am not looking for a partner, but would like ideas of the quickest places to raise private money beside the local rei club? Thanks for any info.
Hi,
Private money is all around us depending on what you propose and under what terms and conditions.
The big thing is what do you want to do raise debt or equity capital?
You give no indication of actual value or income and expense so it’s a little difficult to stear you the right direction. Do you want to rent 5 to 7 years or re-orginize management and rent rolls, build value and flip to another investor?
It’s a little difficult to know what kind of private money you seek?
GR
The owner is wanting to retire, but what I am looking for is capital for equity. These properties are undervalued. Both properties NOI after expenses are $23,000 and 20,000 a year. Cap rate for both properties are 8 and 9 percent. The terms I am looking for is to pay a lump sum intrest payment after each year.
Hi,
Ok, you know what kind of an investment your searching for, now calculate what terms and conditions you can offer with a decent rate and terms and , and then shop it to friends, relatives, co-workers, your doctor, dentist and your attorney. Most of these people will not have a problem sharing this opportunity with there friends if it is a sound investment.
If it’s solid, makes sense, is a sound investment and stands on it’s own merits you will find investors right away. Remember you can have 4 or 5 or 6 people together, it does not have to come from one person!
GR
Don’t overlook the seller himself. If he is looking to retire find out if he needs the entire $1.4 million in cash. If let’s say he only needs part of it ($500k for example), then that’s all you need to raise from outside investors. You can then approach other investors and tell them that you need $500k to complete the purchase of a $1.4 million dollar deal. You already have the $900k taken care of and just need the difference.
I would suggest creating an executive summary of the deal with property details, rentals and investment opportunity.
Hi,
When it comes to raising private funds the SEC (Securities Exchange Commission) has very specific rules and regulations governing the raising of funds! The SEC has 3 (Three) general sections regulating the raising of Corporate or LLC (Limited Liability Company) capital. Issueing stock (Corporation) or distributing shares (LLC) fall under these securities provisions.
These sections commonly refered to as 504, 505 and 506 public offering’s to raise capital. There are rules reguarding advertising and soliciting investments along with disclosure requirements!
GR
I have a plan written up, but how should it be presented ?
Hi,
How it is presented is predicated by the type of investment? The amount being solicited? The timeline to raise capital? Whether it requires a declaration of accredidation? Whether you can tombstone advertise? What state or states you intend to solicite in? Are you soliciting as a C-corp or an LLC? Etc, Etc, Etc????
GR
Real estate investors can raise funds and access to private lenders easier than you might thought.While donor drives and some lenders rehabilitation loan niche has money to lend, many times the investor or of a project does not meet the lending criteria of the sites are lender.Specialized corresponding to private lenders with borrowers to finance their building projects or business.
…what…?
Exactly…
As I asked yesterday in another forum, “QOTD (question of the day): Will a ‘sify.com’ user EVER make a post that makes any sort of sense?”
Keith
If you are not comfortable with group meetings - face-to-meetings are a good alternative. I generally recommend a breakfast in a quiet restaurant where you can get 15 to 45 minutes late with your views. As the group meeting, you must put your personal loan program details and benefits.
Reach out to your network and talk about an opportunity you have for partners to come into the deal with you. If you start soliciting openly about paying a given return, etc. you may expose yourself to liability under SEC guidelines.
Consider keeping in mind that as long as you co-invest with other active investors in your opportunity.
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If you’re buying each for 700k and they have NOIs of 20k and 23k, you’re getting a 2.8% and 3.3% cap respectively… So, I’m not too sure where you came up with the 8-9% cap.
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Unless these are on the beach somewhere, or in downtown SF or NY, they certainly don’t seem undervalued.
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With these numbers you wouldn’t even be able to cover debt service, but assuming you could, the only way this deal makes sense is if you could magically convince you’re equity to give you promote on a 1% hurdle rate on the waterfall. If you can raise that kind of capital, call me :beer :biggrin
I just realized this post was from 2010… Thanks for the resurrection Jeremy :rolleyes