If people are up for a little sharing, I am interested in hearing what different people are doing to attract and then use private funding. In addition, would more capital help? Or are you constrained by not enough time given the way you presently operate.
Starting with the capital…
First, how to attract private capital?
What have people done to get in front of people who have extra cash to invest? How do you explain what you do? Assuming you have been successful, what do you think really closed the deal? Do people understand how the laws apply when trying to attract private capital?
Second, how to use the private capital.
I am finding that most investors have a limited ability to actually use private sources of funds. Their business model is not very scaleable so the REI would not know what to do with a large jump in available capital. What is your perspective? If you could easily raise a large amount of capital, could you handle more deals? Would the quality or profitability suffer if you did raise your game?
As a little background, I have worked with private money in the past and continue to do so, I have attended multiple times the CREOnline Lenders Workshop run by Ed and Terry so I know the details that are shared there. I have worked for investment banks in London, New York, Switzerland and other locations. I also have friends who have been very successful in the tech sector including one who co-founded LinkedIn. I am used to a lot of zeros. I happen to like residential real estate investing (USA & UK).
I want to hear from actual RE investors and what they are doing in their market. How would your REI activities & you focus change if you had more capital. Significantly more so not some minor change. Enough capital so you could step up to the next level what ever that might mean for you.
The motivation for asking? I have been talking with some investors that I know and I am finding most have a limited ability to successfully use (deploy) more capital. To eliminate the risk that my selection bias is causing the skew in the results, I am opening up the conversation.
Using language from technology sector, I would describe a business that does not scale well as a lifestyle business. Good for an owner-operator who is OK knowing that things will largely grind to a halt if they stop. They love what they do so there is no problem that things will stop when they do.
I am trying to figure out if the lack of scaleability is caused by a lack of capital. If that is the case, the business would swiftly change once the capital is secured. Alternatively, there is a desire not to significantly grow so more capital is not really going to help. A third alternative is the REI has not thought about what to do with more capital so they just do not know what to do or how to attract it.
Your views?
If you think capital would make a large difference, do you actually have a plan for how you could use the capital once you find it? Is there a business plan or something that is credible (to you) so you could attract cash investors?