Does anyone have experience with this?
Vetted out the numbers and I have a handful of attractive opportunities to buy land and build properties. However, do not readily have the cash. So, we'd have to raise it. I've seen things online about directly connecting with investors. But is it really a viable option?
BUMP
Try this Q in the real estate finance section for more exposure.
Thanks
Just moved this over to the RE section. To the top.
Do you have a ton of experience in RE development? Also if you are going to use private money, you need to present a very good return to your investors. I'm assuming that with the lack of cash, your not an experienced developer so you won't qualify for cheap debt. Investor cash has a much higher cost of capital. If you plan on getting a 100% funding from private investors, you will not have much of a return for yourself.
Appreciate the insight. Sadly, I was afraid of this.
'Experience' is limited to an UG RE valuation course, which is about as useful as a used condom. The private investors that I've seen state the amount of cash that they have available, as well as their required return. Guaranteed this is probably too risky for their 1MM @ 4-5%.
If you have a linkedin, I recommend going there are checking "The Real Estate Networking Group", I can't speak towards the legitimacy of all the lenders there, but I see post after post of equity investors looking for good deals. Wouldn't hurt to check. Best of luck with the deals
Will take a look on here- appreciate the guidance.
You'd have to bring something to the table, like special contacts or experience or, frankly, money. You work in equity research, apparently--what's your experience in real estate? Real estate equity investors don't need people to identify projects--they need people who can bring projects from start to finish using their lending contacts, government contacts, experience or expertise, and they also need other investors to do bigger projects. If you don't have any experience then you need to raise money from family or friends and start small to build your resume (and contacts). Most people can't skip over the "experience" part. If all you have is an idea then nobody is going to give up a piece of equity.
Right, this makes sense. What I bring to the table is a return that's not correlated with the general market, as well as, an offering of equity portion in the properties to the investor.
The cash flow that the properties would generate is unreal (local college campus) but again, experience is limited. Ideally we were looking to raise the cash, go to the bank to create a note/debenture, buy the lot, initiate permits/loose-ends, hire contracts, over-see the building portion, refinance with a mortgage, return the cash/see if the investor is open to granting us a revolver, repeat.
This very well may not be logical, which I understand. Hence why I sought advice.
ptk, I know what its like to be ambitious in the RE world. I used to think like you, but you need to build up real experience. When you say you will offer returns higher than the market, well so do alot of developers. This is pretty much a given if you plan to get investors. You mention you would offer equity to investors. Well honestly you won't be offering, they will be taking it, if they are giving you all their money, they want most of the cash flow. These investors are going to ask themselves why they should invest with you? So many things can go wrong with development, what if you have cost overruns, what are you going to do then? You need to start small, build up your own money and do smaller projects. Too be honest, even if you find someone willing to invest with you, they will probably have some crazy demands like repayment guarantees or something. If your only experience is one RE undergrad course, why would they put their money with you? Think about it. Put yourself in their shoes, if you had a million dollars and some person with no experience says he wants a 100% financed project, what are you going to say?
SB'ed for hitting me with some truth- Kenny powers style.
That was the slap in the face I needed
/acquire ccy
Everyone has to get started somewhere. Whats the project cost and what return is your proforma showing? I'm assuming is student housing?
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