The Case For High Net Worth Private Money Investors

Your best source of private money is from high net worth investors. This shouldn't take much convincing. Unfortunately, far too many real estate investors concentrate their private money raising efforts on non-accredited investors.

There is nothing wrong with raising money from non-accredited investors. I have had private investors in both accredited and non-accredited status. If someone wants to invest $50,000 of their $150,000 net worth with you, no problem. Just make sure you make the proper disclosures and any filings you may need to do with your state securities regulator. It can (and should) be done when the situation is right. This could be all the time for you or none of the time.

Accredited investors, as per SEC definition, are those with a net worth in excess of $1,000,000 (excluding primary residence), joint household income of more than $300,000 ($200,000 for individual) in the most recent two years. How do you find out if someone is accredited or not? By having each prospective investor complete an Investor Questionnaire prior to receiving the intimate details of your opportunity (you can accomplish this via mail, fax or in person - it's pretty easy and can put investors at ease).

You see, marketing your real estate investment opportunity to people that are ready, willing and able to invest with you is very critical to your success. With accredited investors, you can more easily offer your securities under exemptions from registration (far less paperwork and hassle with SEC filings). This is a BIG plus when you are raising money.

Another benefit of raising capital with high net worth investors is that there is less likelihood of redemption. Redemptions are when investors want to take their money out. Imagine having $1,500,000 in private money invested in a commercial project and one of the investors wants to pull $200,000 because their 401(k) took a hit. Not good. You then have to find somebody to replace the investors position, which at the very least may disrupt the project.

High net worth investors also better fit the "able" aspect of investors being ready, willing and able to invest money in order for you to invest time and effort bringing them in. This is very important because you want to get the investors money into play quickly after they express interest in moving ahead. If they have to juggle funds around between accounts or combine funds and scrape the money together, you might spend valuable time coordinating things and the investor may get cold feet.

Again, there is nothing wrong with having non-accredited investors. I am making a stronger case for you to work toward having accredited/high net worth investors that make up the bulk of your investor base. Your business will be all the more profitable in the long term as a result.

Article Source: http://EzineArticles.com/?expert=Adam_J_Davis

3 Key Sources to Locate Private Money to Purchase Investment Real Estate

Being a real estate professional in the Metro Detroit area, I'm constantly asked "Scott, can you find me a deal?" 100 percent of the time my answer is 'absolutely I can within 24 hours'. Then I add asking 'do you have a source of money to be able to close the transaction and purchase the real estate deal I've found you quickly?' More times than not I catch them with a blank stare on their face and not knowing what to say.

All across the United States there is plenty of 'deals' to be had, but with the lending restrictions that are being put out there and the competition to acquire these great deals, it's virtually impossible to build wealth through real estate without having different sources of money on hand to get the deals closed.

My easy answer to this is 'private money'. Again, I reiterate that it is my easy answer. The harder part of the equation for most people new to real estate investing is how to acquire the money.

My quick synopsis is three key sources that I have directed my clients towards to start on the path of investments that will be profitable.

1. Family Members

I know what most people will say here is that they do not want to mix business with family. And truthfully that makes for a good argument, but I have also found that most arguments are based on not having anything to put the family members mind at ease knowing that they will get a return on their investment and much less getting back the initial investment itself. What's great about private money in real estate is that the money lent is secured by the real estate itself, which in turn will give your family member a little peace of mind.

2. Financial Advisors

Many people play it 'safe' and put their money with their financial advisor. But like some people that I know as their 'nest egg' starts to grow they get the itch to put their money in 'play' in another sector and they start bugging their advisor for options. I would recommend contacting financial advisors and letting them know you are a seasoned investor and if they have any clients that have monies that they would like to invest and have it secured with real estate. You would be surprised at how many will sit and listen to you.

3. Real Estate Investor

You read this and think, wait a minute aren't they my competition? And my answer is absolutely, but they are also in the business of making money. And the best part of this source is they already know what they are looking at in terms of if the deal is going to make sense. There is a caveat to this in that the interest rates may be a bit higher, but if the deal is 'juicy' enough then it will be a win-win the whole way around.

There you have three sources that you can use to locate private money to help you through your real estate endeavors. Every client I have that takes their business seriously, I tell them to start there. And soon enough they will be the one being approached to invest in someone's deal.

Investing in real estate is not as hard as many people make it out to be. You can only do so much with banks then you will have to look for other resources. You must include private money into your strategies to become an ultra successful real estate investor.  

Article Source: http://EzineArticles.com/?expert=L._Scott_Ferguson