How do I attract investors considering I don't have a track record?

Question

Hello all,

This is the year I have made a solid commitment to myself that I would take real estate investing extremely seriously and get starting investing and making some money.I have an MBA in finance and have worked in commercial real estate analyzing complex deals for the past three years, so on the financial side, I have my chops.

Here is my question: I have no money of my own for a downpayment and if I would do a real estate deal, clearly I will need investors.  The challenge is that I do not have any practical personal real estate investing experience. So, if I were to put myself on the other side of the equation, and someone without any experience came to me to ask for money with a real estate proposal, why would I give them money to do this? (This goes especially for bank financing, how in the world would they give me money for an investment property without any experience? Complicating matters further is the fact that here in Canada, all commercial loans from any lender will be a recourse loan).

I am looking for advice as to how I should go about investing.  The only other alternative is to partner brokers with investors, analyzing the deal for the investors, putting financial packages together and collecting a 2-3% fee for this (it would probably have to be characterized as such given in Canada it is illegal for a broker to give money to someone who is not a broker for a referral or lead.

I appreciate your help.

Take care,

David.

Wes Marden · Answer

Ask. You just have to ask those around you if they are interested in real estate.  You may find a partner that way.

Do you have any sales training?  Rejection is part of the game, you just have to keep asking till you find a lender who will work with you.  Or a partner who can get a lender.   My last car(older sports car) it took me about 4 lenders to find one who would lend on that car.  I kept asking till I found one who would work with me.

Learn to accept rejection and keep plugging away.  If you want something bad enough you can usually find a way to make it happen.

You may have to find a house that you can occupy while you rehab it.  Live there a while and fix it up until you are able to sell it.  There is a way if you work long/hard enough to find it.

Norm Chrostowski · Answer

Well that depends on your RE goals? What do you want to do with RE? Buy and flip? Buy and Hold? Wholesale?

For instance,  If you were to start advertising for motivated sellers, and actually find a deal you think might make sense, come here and ask their opinion. You won't find smarter, more experienced investors than right here. Everyone is more than willing to help you along.

You could also network with your local REI club ( if you have one where you are). If your looking for buyers, join and mingle. Ask people there if they're actively looking for properties, conversationally of course. If you have finance knowledge, you have to sound a little like you know what your talking about.

Looking for sellers will get you the deals, finding buyers/partners will be the funding to buy them.

I'm no pro (yet), but it would get you started. I also suggest reading as many forums and blogs as possible right here.

Just my .02 $...hope this helps

Norm

Tod R. · Answer

I agree with everyone about educating yourself.  Also, you do need some cash of your own.  Other investors want you to have your own money at risk with theirs to help insure you have just as much incentive as they do to succeed.  It's always easier to walk away from sweat equity versus cash.

With that being said, you already have a great amount of education and RE knowledge that you can build upon.  Find those that are successful in the type of RE you decide to focus on and learn from them.

Keith Uthe · Answer

Hi David:
          If you are just starting out you really need to get started on educating yourself before you jump in with both feet and your head and end up underwater drowing from not knowing which way to go.  There are plenty of so called "guru's" out there that will ask you to pay thousands of dollars for their products and they also are mostly U.S. based.  [SOLICITATION AND EMAIL REMOVED]
          
          I hope to hear from you sonna dn wish you great sucess.
          
          Keith
          Calgary, AB

Michael Rossi · Answer

How do you attract investors with no money and no experience - YOU DON'T.  Well - that's not quite true - what I should say is that you won't attract any successful or intelligent investors.  No one that is successful or intelligent will give money to a newbie with no experience and no skin in the game.   However, as Justin so aptly said, that still leaves friends, family, and fools who don't know any better and are easily taken.

Justin S. · Answer

David-

What kind of investing do you want to do?  You can wholesale with very little out of pockets costs by assigning contracts.

If you are looking to raise capital, you need to put a business plan together and ask friends, family, and fools for money.  Lending to investors is very common but not many people are comfortable with it.  A lot of them feel like buying stocks are safer because "everyone" does it.  You'll need to explain it to them why their money is safe and secure with you.  Plus they should earn a higher rate of return.

If you can't find money, then try your hand at creative techniques like sandwich lease-options, subject to, seller financing, etc.

David F. · Answer

That sounds like a more reasonable plan.  It's easy getting caught up reading certain investment books, and as I've stated in another thread, I want to make sure that I'm going into this with the appropriate expectations and getting my feet wet via bird-dogging and seller/buyer brokering sounds like the best way to gain experience and with that under my belt it certainly would be more convincing to get someone to invest with me.

Take care,

David.

Joey Budka · Answer

David,

The above posts pretty much hit it on the head: once you've understood your own real estate goals, and the methods needed to make the goals a reality, start networking like crazy on this website, at your local REI club, cahflow club, etc. Once you get in touch with a group of sellers or buyers, you could work with both parties to bring deals together. For the sellers, you could earn a finders fee, $1000 is typical depending on the deal. On the buyer side, you could bring deals to them and maybe get a piece of the action with the profits: equity share, percentage of cashflow/month, etc. When you've built up profitable business relationships by acting as a middleman, I'm sure you'll end up having someone in your network who'd trust your experience enough to fund your first deal deal. This is how I'm doing it right now, and it works.

Best of luck,

Joey

Jeff Warner · Answer

I agree with Norm, the first question you need to ask yourself is what you want to do in real estate. There are many ways to invest in Real Estate but without capital or experience I would rule out buying and holding as well as fix and flip (just my opinion).
          
          Figure out what your goals are and study, study, study. Just like the financial world you were involved in, you need to speak the language of REI. 
          
          As far as someone lending you money with no experience or capital of your own, it's possible but not likely. You could look everywhere for the funds you need but what good would it do if you didn't have the experience to use it to the fullest? Borrowing money without the experience could be a rough lesson and may even hinder deals down the road.
          
          I would recommend you look into Wholesaling. You can learn a lot about Investing by being a Wholesaler, you'll also meet other investors in your area which will help you gain more experience. 
          
          Study, join your local REIA, read the forums and articles on this site and network as much as you can.
          
          Just my opinion. Good Luck
          
          Jeff

How do I attract investors considering I don't have a track record?

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