Need help. I have a potential private investor, my brother-in-law wife father. I was at his granddaughter’s birthday party at his home and we talked. We talked for well over 40 minutes about investing. This is my first time meeting him.
He told me he has substantial amount of money coming online due to the sale of his ranch. I currently own some commercial investments, a sizeable amount.
i am basically scared. I have never approached or follow-up with anyone regarding private financing or equity ownership. I own all my investments 100%.
what should be my next step. he says he wants to talk to me further over a round of golf? Should i send a letter or just call him.
HELP
Thanks
Hi,
This is right up my alley, although I am a terrible golfer, and have a wicked slice from time to time and my handicap requires a 12 digit calculator, I might just be able to help!
In investing there are many ways to except a direct or indirect investment!
I like using investors as 1st or 2nd TD (Note Holders) as there is no SEC compliance issues, your not issueing stocks or creating limited or general partners. When an individual property is being sought after we can substitute private money in place of a mortgage lender on any residential or commercial property. You can also place a 2nd note for say down payment money on a property your buying right (Discounted) where the funds are used for down payment, closing cost’s and repairs.
On the other hand you have potential to start and create a real estate holding company! If you start and create and file a corporation, then solicite this investor to make an investment with you for an amount of capital dollars your transaction falls under the SEC 504, 505 or 506 programs which allows you to raise capital of between $1m dollars and an unlimited amount of money based on what’s called un-sophisticated or sophisticated investor statis, you are basically asking the investor to make a declaration of his income and net worth on paper for compliance under an SEC program.
Now if the two of you agree to start a real estate business as partners you can create it one of two ways either as a C - Corporation or as a Limited Liability Company or S - Corporation. A C - Corp operates just like big business, you pay yourself and your staff salaries and can additionally compensate yourself by creating stock options and dividen’s, and your partner can either put his capital in for stock or options or can loan the money into the company under negotiated terms and conditions.
There are advantages to creating a Limited Liability Company or S - Corp as both allow you to allocate tax write - offs and disperse profit’s through to your personal bank accounts and personal taxes, you will generally have better income the beginning years, but do not recieve all the expense write - offs a C - Corp offers and you may still be required or asked for personal tax returns even after two years in business and a good credit rating because your an LLC or S - Corp. The option of loaning money to the LLC or S - Corp is the best way to capitalize this type of entity.
I would call the gentleman and set up a meeting (Round of Golf) and follow it up with a e-mail to confirm the appointment. But before that determine what you would like to create and what you would use his money for, then set the appointment.
Good luck,
GR
I sent you a PM. Thanks for the response.