The No Fail Way To Raise Capital

Thank you for continuing this investment journey with me. Today I would like to teach you how to raise capital for your investments. To become a good capital-raiser, you must first invest with your own money; then you will be more confident dealing with other people’s money.

There are three ways to finance your property purchases: seller financing, conventional or bank financing, and cash offers. Of the three, cash offers are usually the best way to improve your deal. Cash offers entice the seller to give bigger discounts, allow more concessions, and prefer your offer in a multiple-offer situation.

You may ask yourself, “How can I obtain cash so that I can take advantage of its investing power?” One of the easiest places to find cash for investing is in your home equity. Home equity is the difference between your home’s market value and your mortgage debt. Home equity lines of credit make it very easy for you to access cash for investing. Each financial institution works a little differently, but generally, they will give you a loan based upon your home’s appraised value.

Once you start investing your own money into real estate, you will have greater confidence working with other investors. Potential investors may have their money tied up in stocks, bonds, retirement accounts, saving accounts and other real estate investments. Persuading them to convert their money into your investments becomes easy when you explain the returns and the security that you can offer.

I give returns based upon how much money the investor puts into the transaction. Returns usually range from a simple 7% annual return on the low end to a 15% return, 2 origination points, and a portion of the net profit on the high end. What I pay depends on how much the investor puts in, in relation to the overall sales price.

In addition to giving great returns, I make sure that the investors’ money is secure. I secure money in one of three ways. First, I offer a simple promissory note that includes the property address, the rate of return, and the time frame. With larger investments, I secure the money by issuing a recorded trust deed and note against the subject property. Lastly, I offer partnerships in corporations that own property or even on the property title itself.

The most important thing to remember about capital raising is that you are dealing in securities. Become informed of the simple, legal ways to raise and secure capital. If you do not follow the exemptions in securities laws, you will need a license to raise capital.

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Happy Investing,