I have recently started venturing into rentals and I am starting to find good off market apartment deals. What I am looking for at this point is to find passive investors to put money down on the deal that want to earn 10% on their money. I am having a little trouble not knowing where to begin looking for people who want to invest in real estate in this way. Any advice on where to find investors like this would be very much appreciated!
@Kyle Clabby where have you looked?
A good place is local meetups and self-directed IRA get together's. Just make sure they are established and have done many deals in the past - the best private money lenders are those that come recommended through your network.
Best of luck!
@Cameron Tope I have just begun looking, thanks for the tips 🙏
The mid Atlantic Summit in Philly this week will have many BP capital raisers as well as lenders. Find the events that bring successful people together primarily for education and networking not the sellathon that a lot of groups put together.
@Carl Fischer Agreed! Awesome event, I went last year & will be there tomorrow!
@Kyle Clabby If I read your post correctly you’re trying to find investors who will lend you money for the down payment and are going to pay them 10%? If this is correct you are way off base. The investors would essentially be taking a second lien on a property with no equity and providing financing to a borrower with no down payment. We lend money on deals all day long and our investors get 12% interest with a first lien and with the borrower having a significant amount of his own cash invested.
When a deal is syndicated, the investors putting up the down pay,ent get 80- 100% of the ownership, a preferred return, and their investment returned when sold before the sponsor gets anything other than a management fee.
Further, when soliciting or engaging passive investors, you are selling a security. You either have to register the offering with the SEC, or have an exemption from registration. The way you do this not only has implications as per the legality, but also has implications for any defenses available to you should you be sued. Most worrisome is the fact that “just doing it” would open up the sponsor to charges of fraud when ding sued; if found guilty of the fraud charges then bankruptcy would not be available to discharge the debt, and unless the sponsor enters a plan to pay the investors, his life is about to be different forever. Financial fraud is a disqualifier for many types of jobs.
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