Attracting Investors
I am looking for suggestions on how o attract investors to work with me. They don't know me so i hv to provide security for their investment. The vehicle is single family homes, to buy mostly fm distressed sellers. Cash gets attention, cash buys. Often you just hv to take possession of a property with cash and hold for possibly 2 mos while selling nd closing (for traditional finance deals. Then you have those buyers that you have to finance for a couple of years with a balloon... this ties money up but there is a super return at the end or even after say 6 mos seasoning and then selling the note.
However if you have 6 - 8 deals going a a time (which is certainly possible with a good advertising campaign) you goot hv probably a mllion in cash to roll thru as you buy and sell. No doubt there are people out there with the juice esp in retirement plans, self directed ira's...) but a structure with security for them has to be provided. Any thoughts on the best way to attract capital and provide this security???
Thanks
You need to start by setting up a corporation. LLC or C-corp preferably. Then you will need to advertise the two things they want to hear security and high profit margins. They need that warm fuzzy feeling first and foremost then they want to make money. You will need to guarantee them that they will make X% per year on there investment.
Check out your competition in your area and see what they are offering, meet it or beat it.
You should also contact investment lawyers and get there opinion, they will know what there clients want and also may have a couple of investors willing to work with you.
Good Luck,
Kyle
Thanks Kyle,
It appears that an llc is probably the most flexible entity althought I am truly not up to speed on the various ways to structure it for what I want to achieve. Like most things I'm just going to hv to get educated on how they can be used. As the active manager of the llc i'd want to be compensated with a greater % of return when a property sells. I'm not sure if I can structure it so that the investors receive say 15% return instead of a proportional share of profit?? I do appreciate you responding... I'm just going to hv to investigate further into the various structures the llc may allow.
Thanks, Bob