All about Investors & Structures
When talking to potential investors, keep these three things in mind:
- 1. I believe I can be trusted.
- 2. Think about the deal. "Isn't it a good deal? Consider the risks. "How risky is this deal?
- 3. Where to find investors
If you're a beginner, humble beginnings are probably the same as mine, you have to start somewhere, so the first investor is at a REIA meeting, a real estate club meeting, or a real estate conference, and start by going to gatherings. You can watch the Chamber of Commerce meetings, but I recommend starting with the inner circle of friends, family, co-workers, and former co-workers.Now you might be like, "Hack, I don't know anyone who has money. My friends and family are broken, and I'm too embarrassed to ask my co-workers." The truth is, you don't know anyone with money yet. Today there is much more money than trade. Doing Trading is hard, but good trading comes with money. Your only job is to make good deals and the money follows.
What comes first? The Investor or the Trade?
If you are a beginner, find an investor first. If you are a fully experienced investor, trading comes first.
What’s the best way to Convince Investors so they Invest with You?
When you meet investors in front of or on the phone, they ask themselves, "Can we trust you?", "Is this a good deal?", "Is this a risky deal?”. Let me tell you, the trade, and the risks based on the seven factors you need to persuade investors to invest. These 7 things will make investors say yes.
- 1. Your deal should be undervalued.
- 2. The business must have some income potential capacity. This means that rents may increase at any time
- 3. You must have excellent cash and cash returns.
- 4. The business must have good demographics
- 5. Exit strategies must be realistic and conservative
- 6. A Proven track record
- 7. You need to create an overview
With these seven factors, you are in a great position to get investors to say yes. The word of wisdom is to start small. You can easily do it yourself.
Top 3 Questions Investors Ask
1. Can you assure me that I will get my money back?
The answer is no. All investments on this planet involve risk. It's not just an investment; it's everything. The investor said he suffered heavy losses in his 401(k) and stocks in the last market crisis. Tell them that their investment is backed by property located in an LLC. Assets insurance protects against loss, fire harm, flood damage, vandalism, etc., so that safety is there. We cannot guarantee anything.
2. When will the money come back to me?
It depends on your exit strategy. By the point we meet our investors, we have already provided them with a years-lengthy go-out approach. For example, you can say, "The contract is for five years, after which we are planning to sell the property."Therefore, the exit strategy is usually between 3 and 5 years.
3. Can I get any tax benefits?
I am not a tax expert, so if you need help with tax benefits, please contact a CPA. The cash flow they receive may be due to the amortization of the LLC, such as:
Material and depreciation costs are protected. Because of this, a big portion of your cash flow won't be taxable. It is covered by the LLC fee but first check with your CPA, as it varies from company to company.
People start businesses for reasons unlimited. Some people start out desperate, some just want to make a quick buck, and some want to change the world and revolutionize an industry. They don't care about money or fame; they have just found their passion. Some people just want to be themselves. After a few startups, I believe there is no company that I am completely satisfied with. The first company that I owned was having positive cash flow, I either hated it or liked it; I'm not sure, but the business model doesn't work for me. I can let you know from my experience that it is possible.
Launching my first fund, along with a platform to help others start their first funds, has allowed me to live the life I want. Funding is difficult. However, once purchased, it is very profitable. What is the secret of investment funds? - You don't need money, but the satisfaction of being able to gather the knowledge you need to completely change someone's life is enough. Even if you have a basic knowledge of private equity or venture capital, you'll be laughed at if you want to start your fund. I don't know how many people, even some of my closest friends, laughed when I told them I was going to start a fund. Those people are not smiling today. On the contrary, most of them call me and ask me to work for them.
For a home florist or wholesaler looking to expand their business, it doesn't work. We are talking about the most efficient way to set up or grow a real estate fund. Have you considered using the model to grow your investment? The most common entry options are house flipping and wholesale. My mentor is the co-founder of a multi billion-dollar family of funds focused primarily on real estate. They buy huge apartment buildings, fix them up, and turn them around.
This is the same concept as house flipping, just much bigger. They use the funds because otherwise, it would be very difficult. I'll ask you directly where you will begin when establishing a real estate fund. My fund-raising formula has successfully led hundreds of average Joes to their lifelong dreams.
