Investing in real estate deals requires investors to know more than how to find capital; they also must know how to secure the capital once they know where to get it. Investors must therefore learn how to approach those who have the money they need once they have determined where they can find the money they need. Likewise, there are plenty of lenders who are just waiting to lend their funds to today’s investors. In the end, it’s up to the investor to prove they’re worth it.
Here are some of the most important characteristics venture capitalists and private money lenders look for in those who want to raise capital for real estate ventures:
● Seasoned experience
● Team structure
Having real estate investment experience is an important factor in establishing credibility. There is nothing that can provide peace of mind to those parting with a large sum of money like experience; this peace of mind cannot be overstated.
The luxury of boasting about the experience is not something every investor can enjoy. As for new investors, they have virtually no experience. Keeping that in mind, how can new investors overcome a lack of experience?
Even the most successful investors were once “green behind the ears”; nobody can boast many years of experience immediately. In order to compensate for their lack of experience, new investors are advised to prepare, learn, and pay attention to details. Even the most inexperienced investors can succeed with a little diligence and drive. On a given deal, you must carry yourself with confidence. Be sure not to let your lack of experience overshadow your skills.
Investing in real estate is a people business, and the best investors are aware of that fact. At the very least, every single transaction requires the cooperation of two parties. Therefore, if you want to learn how to raise capital for real estate ventures, you must be able to work well with others, especially your team.
The rapport you have with your team is important to private money lenders, and for good reason. An experienced team led by an effective leader is capable of overcoming almost any challenge. How do you determine if your team is competent? Before deciding whether or not to fund the deal, what will lenders look for in your team?
The composition of your team has the most impact on how you raise capital. Ensure that your team exhibits the following qualities before you even consider asking for money:
You need to convince money lenders that you are worth their time when trying to raise capital for real estate projects. Lenders will be more inclined to lend you money when you present them with opportunities. To be more specific, the investment you are seeking should excite you. Remember, you are raising capital for the real estate investment. You need to convince them to lend you the money. A lot of the work should be done by the house you intend to buy. You still need to run your own numbers and show lenders that their money isn’t better spent elsewhere.
Here, you should disclose your intentions up front. Be clear about the amount of investment you’re looking for and what a return on investment could be. Make sure you don’t leave any stone unturned since smart money lenders will want to mitigate their risks as much as possible. The more work you have to do, the more questions they may ask you. It is your responsibility to account for every aspect of a deal. The right opportunity will present itself if you prove to them you have crossed all of your t’s and dotted all of your I’s.
Private money lenders are no exception to the need to mitigate risks when investing in real estate. Leaving money on the table isn’t an option for them. The opportunity you present them will need to be a sure thing.
Investors find it difficult to present their strengths because they focus so much on their properties. Though the property in question accounts for a majority of the venture capitalists’ loans, it is only a small part of the equation. You need to learn how to present yourself and your investing business to raise capital for real estate. You need to demonstrate that you will return their money with interest to finance a deal.