I tied up a good deal. How to raise the $$


#1

Hi Gang,

I am in Due Diligence on what I believe is a pretty good deal.

I know lots of people with money who would co-invest, so actually finding the money should not be an issue.

However, I want cover myself legally.

Can you comment on the logistics of contacting them? Should I have an attorney put together an offering or just call my friends to tell them about the deal?

Thanks and any suggestions would be great.

Peter


#2

Hi Peter,

Congrats on your deal. Unfortunately it will take much more then a simple posting to give you any real direction on your questions - someone could and probably has written a book or a whole course on this subject matter.

Here are a couple of key points to help direct you in your quest for information:

You will need to write an “offering” or “business plan”(I do two of them, one for debt and the other for equity - both share a lot of similar material but the purpose of each is different). In this document you will describe the property, its history, its present condition and its current financial picture re-casted to how you will run the property. You will need to “offer” specific terms to those who may want to invest with you - amount of money you are raising per person and project or guarantee rates of returns to your investors. You should also describe your acquisition, holding, and divesting strategies, together with how you propose to handle legal and accounting details for the property. Don’t forget to emphasize the negatives - prospects will take you more seriously if you present skills in risk assessments and how you plan on handling such.

When you enter into this niche of real estate you will also need to become familiar with state and federal securities laws. It can become very complicated and a lot depends on the amount of money you are raising and whether you are crossing state lines. Here is a decent link on that subject although it is geared toward California investors:

http://www.methvenlaw.com/Handout_for_Real_Estate_Deals_and_the_Securities_Laws_2.html

Hope this gets you pointed in the right direction,

Karl