How To Raise Real Estate Investment Capital

Why Your Rich Uncle Won’t Invest with YOU!

Have you ever had a rich friend, uncle, or neighbor that will not open up their wallet to do business with you? There may be many reasons they refuse to do business with you. Let’s look at three common reasons and what you can do to get their attention:

1. Friends and family do not want money to get in the way of relationships. Disagreements over money have caused many rich families to become divided. One way around this is to create a company and make them a partner. Show them how investing in our company is no different from investing in a company in the stock market (except you both have more control). Set clear expectations of what each of you will provide to the company. If you’re smart, you’ll show them all the things you will do and all they have to do is write a check and examine the monthly/quarterly reports you send them. Your friends and family might also be more comfortable if you have other investors as well. There are many ways you can ease their fears and finding what those fears are is a good first step.

2. They don’t understand the investment. There is an old saying, “A confused mind says no”. Just because someone has accumulated some wealth does not mean they understand real estate investing. Here’s where you have to be very clear on what you do. You can’t overwhelm your investors with the blow by blow details. They need to know what you will do with their money, how they are protected, what their return will be and when they will receive payment. That is not to say you should hide any pertinent details, however they don’t care that you will be painting the rooms off-white.

3. You lack credibility. Let’s face it, unless you have a huge investment portfolio you are still somewhat unproven. And for that matter, friends and family have known us at our worst (they remember we got a D on a test back in the third grade). This is where your board of advisors and partners become extremely important. While Aunt Susie might be willing to loan you a couple hundred dollars, she wants to know her $100K is going to come back to her. If you have done some deals, make sure to highlight them in written format. Additionally, correctly chosen business partners or advisors with experience can also increase your credibility. To help with your personal credibility put together a professional looking credibility kit. To help with the credibility of the deal, put together all the numbers, pictures and a summary of the investment in a professional manner. (Personally I did not invest with a known “guru” because the presentation wasn’t done professionally). The details in the presentations matter.

Not all of your friends, family or neighbors with money will do business with you. If you want to increase your success rate then make sure you are sending out a clear, concise, and professional message. After you’ve done a few successful investments, they’ll be asking you to get involved.

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