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Tuesday, March 12, 2013

Raising Private Money for Real Estate

8:27 AM
Trish Williams was the speaker at last night's meeting of the North End satellite group of REAPS (Real Estate Investors Association of Puget Sound). Trish has raised $22million in private funds in the past 30 years, mostly for single family homes. Her agenda covered the following topics on raising private money for real estate:

Attitude
Money Stats
How to get private money
As for Attitude, Trish pointed out that Money is a tool; money is not evil; it depends on what you plan to do with it.

She presented the following Funding pyramid: Institutional Equity (Hardest to raise)
Individual Equity
Grants
Strategic Financing
Bank lines & loans Financial Maneuvering - (e.g. Refinance to pull money out)
Social Lending
Creative Funding
Crowdfunding
Quick Loaners

Trish says that institutional buyers such as hedge funds purchase 30-40 properties per week in our area, buying with cash and holding long-term. They may be spending $100M, paying 20-30 cents on the dollar, but they are buying in bulk.

Angel investors are individuals who provide capital to start-ups. They are usually affluent or hold a personal stake in the success of the venture. Such investments are characterized by high risk. The average angel investor is 47 yrs old, has an annual income of $90K with a net worth of $750K; are college-educated, self-employed, and invest $37K per venture on average. There are 200 angel groups in the US.
Trish described the lessons she has learned in the last few months, buying 240 units or less in a tough lending environment. It is best to know what investors want, looking at cash-on-cash returns, cap rate, or cash flow. There are more savvy investors today, with a lot of investment options from which to choose. While this may be the best time to be buying, it is important for investors to know why they should invest with you.
It is important to know what potential investors want, and here are some questions to help determine this:
What do you need to invest to make your business work?
How can I help your money grow? Let me show you how to rebuild your IRA.
Find out what investors are looking for up front.
Alan Cowgill, Jillian Sidoti recently gave great presentations to REAPS members on how and when to approach prospective investors.
Put your credibility kit together and approach angel investors
angelcapitalassociation.org/directory
or other crowdfunding sources:
Gust.com
Funded.com
Equity net.com
Bigger pockets.com
Raisemecapital.com

Here's a link to a crowd funding video I really like.
Talk to friends, family, people you know - even strangers at the grocery store - and give them your pitch. For more information on private lending, please contact me at HomeLandInvestment@gmail.com or call me at 425-270-7292.

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