ADM All Dominion Mortgage Blog

When it comes to raising private money for your apartment deals, you are only limited by the scope of your imagination and creativity.  The amazing thing is that there is a simple, four-part formula that you can use to raise private money for multifamily real estate investing.  Most people, however, don’t know about this magic formula much less that there are four parts and what those four parts are.  Let us examine each of these four parts for raising private cash.

Keep in mind that all four of these need to be done simultaneously for the formula to work in real estate investing.

Predisposed:  You don’t want to make this a difficult process.  So to make it easy, you need to target people who are already predisposed to investing in real estate such as apartments.  They have already shown some affinity, some familiarity, and some willingness to invest in real estate.  They don’t need persuading that real estate is a good investment vehicle.  All they need to be persuaded on is you and your deal.

Control :  Preservation of capital is the primary concern before a private investor releases his or her funds.   Control is described best as when you are putting together an investment vehicle, how does the investor feel that they are retaining control over the transaction if something goes wrong?  If the borrower does not perform, how does the investor get control of the situation?

Low Risk:  The second complimentary part to Control is low risk.  How do I design a real estate investment vehicle that is as low risk as possible for the investor?  Ideally, it is no risk and if you go to the extreme, it is risk reversal.  The private investor actually makes more money if the borrower defaults.

High Return:  Once you have found someone who is predisposed to real estate and you have convinced him that you have a low risk transaction then the other human condition kicks in.  The investor then wants to know how good a deal he is getting for the low risk investment.  You have to craft an investment for them that yields a high return but doesn’t give away too much of your profits.

The premise of this formula is that you are building an investment product thru apartment investing.  The more you can package up your deal, and quickly and clearly articulate its merits makes all of the difference in the world in raising private monies.  With this formula alone, you probably know more about raising private money than 80% of real estate entrepreneurs out there.  The key is remembering that all four components need to be done at the same time in order for you to be successful.

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You don’t have to “graduate” from single family to multifamily. You can start with multifamily – just like Lance Edwards did.  And besides owning apartments, you can flip them for big cash. Utilizing the multifamily apartment strategies he now teaches and writes about, Lance retired from his job in July, 2005. For more information on how you can achieve financial freedom using other people’s money, visit http://www.ApartmentWealthMachine.com .

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