Real Estate Investors: You Must Read This

Mar 09, 10 Real Estate Investors: You Must Read This
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by James Scott

For real estate investors, there are two things that are always in short supply regardless of the ups and downs in the economy: capital and quality inventory.  Most investors that I have worked with not only need capital but they also need strategies to go after capital that is not issued based solely on a credit score.  Even if a real estate investor has good credit, they still have the obstacle of too many inquires and too many open loans on their credit report.  Funding sources are spooked by these distractions and turn the applicant down even though all of their loans are current and they have a solid FICO.

If the above describes you or if you have limited or poor credit and you are a serious real estate investor, here is how to get all the capital that you will ever need.  First, put a solid strategy together.  Start with your company infrastructure.  Organize your company with a CEO, CFO, Board of Directors etc.  After you’ve done this, set up your inter-industry strategic alliances, which should be composed of other investors, bird dogs, electricians, roofers, general contractors etc.  You want each of these alliances to have a purpose.  They should be a portal for industry niche knowledge, consultation, and referral hubs.  Let each of your alliances know exactly what type of investments you’re looking for.  As they are sending you referrals, reciprocate by issuing them work in their specialty.

Next, you want to have a solid business plan written for your company (don’t write this yourself, have a professional do it for you) that spells out the intricacies of your company, your alliances, your accomplishments and goals.  Paint a picture of success and strength.

Next, you need a mechanism for accepting investment capital so you’ll need a Private Placement Memorandum.  This document package gives a technical breakdown of your investment opportunity and spells out the risks and advantages in detail to keep you from getting sued by investors down the
road.  This memorandum takes advantage of SEC Regulation D Rule Exemptions 504, 505 or 506.  A PPM is the minimum requirement dictated by the SEC for accepting capital from accredited and non accredited investment sources.  Real investors will demand a PPM anyway, so it’s good to have it
done beforehand.

Now that your company is properly structured, you have a solid board of directors and alliances, your business plan is well written and to the point, and you have a solid outlet for accepting capital from investors, you are now ready for capital.  Your best bet is to go back to the company who wrote your business plan and private placement memorandum and use their ‘investor finder’ service.  Legitimate
corporate consultants who write technical documents will also stand behind their work by assisting their clients in finding investors.  One solid strategy for getting access to capital quickly and easily is to have your Investor Finder go through their database and email individual and institutional funding sources.

When you are contacted by these investment sources, give them the option to invest in your company using the PPM (which will give you a fund in which you will be able to rehab real estate, buy at auctions etc).  You will also want to give them the option of investing in a ‘per deal’ scenario.  In addition, allow them the option to also (or only) invest in particular transactions with you so when you get a deal.  With a solid investor finder service, you’ll eventually have 100+ solid investors to go to for quick capital on
particular transactions that go above what your PPM fund can handle.

There you have it, a strategy that works 100% of the time for real estate investors globally.  Your best bet is to make sure that you do this properly by hiring a consultant that can set up this process for you.  Cheers to your success!

Need Real Estate Partners and Funding?  Need A Corporate Consultant?  Call Princeton Corporate Solutions at 267-233 0183

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1 Comment

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