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Raj Gandhi
  • Real Estate Investor
  • Saint Paul, MN
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145
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Raise capital using a Survey instead of sales pitch to family & friends?

Raj Gandhi
  • Real Estate Investor
  • Saint Paul, MN
Posted Nov 14 2014, 08:05

I'm trying to find a way to purchase a couple of 4-plexes.  A down payment would be in the neighborhood of $150k.  Estimated Cash on Cash return would be 10%.  That's worthy of serious consideration partly because rents will increase in the near future.

I could ask the seller to take a 2nd mortgage for $100k but the cash flow would be too small with 10% at 10 years.  

The issue is coming up with the down payment.  I could muster $50k but it would be "nice" to find a friendly interest rate from family and friends.  I'd love to have a rate in the range of 3-5%.  My wife says we can't ask her family for loans.  I've hinted to my family in the past and they're generally too conservative to consider such a thing.  Asking for loans (even for an investment opportunity!) isn't particularly comfortable for me (is it to anyone?).  I don't relish the though of being turned-down 98% of the time.

So, my idea is to use a quick survey (surveymonkey.com) to a big list (300?) of family, friends, acquaintances.  I'd need to explain the investment.  Ask if they need a equity stake or unsecured loan.  Ask what interest rate would be adequate.  Ask loan amount they could tolerate.  Ask loan term.  Ask for contact info to follow-up later.

(I'm not trying to do anything illegal.  My understanding is that I can market to unaccredited friends and family.)

What do you think? Will it be effective or a waste of time? Damage relationships?

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