How to find private investors for commercial RE - Posted by BK

Posted by acwebb on July 15, 2003 at 19:12:00:

If the investor(s) put up 30%…this is the equity in the property. The lender will finance 70%.

How to find private investors for commercial RE - Posted by BK

Posted by BK on July 10, 2003 at 10:02:07:

I need help on how to locate a private investor to fund a 1st mortgage for a commercial property in Key West. The value of the building is $2M+ and I need to find someone willing to put up 70% at a rate of around 9%. Seems with CD’s returning such a low return and the stock market still a bit unstable, combined with the RE appreciate rate in Key West of 10-20% per annum, that it shouldn’t be that tough. Any suggestions?

Package, Network, Persist. - Posted by ray@lcorn

Posted by ray@lcorn on July 14, 2003 at 21:52:25:


I assume you are looking for investors because there is some element about the deal or you as a borrower that prevents using bank financing?

Have you got a business plan and investor prospectus put together? For me, getting ready to pitch the deal is ninety percent of the work. The process of putting together a package that answers the most important questions (money required, operating history and projections, how the money will be paid back and when, borrower’s background and experience, etc.) forces me to think through a number of scenarios. That comes in handy when the deal requires the inevitable changes that come from having to accomodate the needs of the parties involved. You could wind up with some investor money and a bank loan. Be ready to be flexible.

Once you’re really ready, then start networking. Real estate is definitely a “who you know” business, but even more important is “who they know”. The key is to get in proximity to people doing deals. Investment clubs, civic clubs, Chamber of Commerce functions… all are excellent places to get the word out about your opportunity to people that can help you make it happen. The Keys are full of retirees looking for sound investments. Your job is to find them and make the best presentation they’ve seen.

Remember that the number one objective is to use all the information you have about the project, in the best possible manner, to reduce the perception of risk. Even with the current low return environment in stocks and bonds, real estate is known to carry more risk than other investments. That means you have to have a propostion that addresses the risks honestly and openly.


Re: How to find - Posted by acwebb

Posted by acwebb on July 11, 2003 at 06:11:04:

Getting Investors to put up 70%??? Why would you do that? Better to finance 70% from a lender and get the down payment of 30% from an investor.

…and getting Investors may not be as easy as you think…

Re: How to find - Posted by Kevin

Posted by Kevin on July 15, 2003 at 13:19:49:

If an investor puts 30% (in second position) than the investor is at risk for the whole deal. So, it’s worse than putting up a 70% first.
How much cash is the borrower putting in?? (Nothing, right?)

Re: How to find - Posted by rm

Posted by rm on July 28, 2003 at 19:52:51:

Are you assuming that the purchase is for full market value?