Looking for advice on finding Funding for first investment?

Question

Hello,

These past 3-6 months have been crazy for me.  I saved up a lot of money to buy my first house, but had to use all the money I saved to pay off an attorney so I could have custody of my son!  Regardless, I've only got a few thousand dollars to my name and I've been networking in my market like crazy.  Talking to other investors and getting to know them has been great.  Every once in a while I get a deal thrown my way and they explain how it's a great deal for a beginner like me.  The only thing is, I don't have 5% or even 3.5% down to get a deal done on a multi family in my area.  Yes, I'm trying to come up with the money, but I guess I'm a bit unsure on how to generate interest from other investors and how to raise capitol to get a deal.  What's the first step?  What is the "vacuum the truck" thing that I need to do to get started?  Do I ask other investors for money and then find a deal?  Do I find a deal, get it under contract, then raise the funds?  I've also heard that I might not be able to get the contract on a property unless I have proof of funds.  How do I get across that?  I know it's possible to start investing with other people's money.  I'm not living a life of luxury, I just have double the expenses as a single dad.  I'm not trying to come up with excuses.  I want to act and get some properties in my portfolio.  Once I figure this next step out, I will take it.  But I just need help figuring that step out and how to approach investors and ask them to come in on a deal with me.  Any knowledge that you can share is amazingly appreciated! :)

Thanks,

Alex Hammond

from

Rochester, MN

Jeffrey Donis · Answer

I would recommend starting a thought leadership platform. Joe Fairless talks about this in his book, "The Best Ever Apartment Syndication Book." This is a way for you to establish your presence in the space, build credibility, and create a group of "riveting fans" who will follow you. This selective fame will help you attract investors. There are multiple ways to do this; start a podcast, start a blog (and/or guest blog), start a youtube channel, etc. Think of a way you can provide value to others by educating them on what you do, and the investors will come. This is a slow burn, however. But persistence and consistence is key!

Rachael Wick · Answer

@Alexander Hammond

Make a list of all the things you currently know about RE investing.

If you need more education then in any spare moment start learning by listening to podcasts or youtube videos.

You could attract partners by attending local meetups and telling them your skills and what your willing to do as a partner.

Be straight up and say your looking for a capital partner. Many people who want to reap the benefits of investing in real estate are so busy with their W-2 job they are willing to let someone else do the hunting and math then bring it to them to discuss.

Leverage what you have now. If you only know a little bit then know there are people out there that know even less but are interested in learning something from you.

Form an investor group or start your own meetup.

Be confident, form a business presence, call yourself what you are trying to be, an RE Investor. Get a logo (free), get business cards with your photo on them (look professional $10), establish a presence on LinkedIn and use that professional photo, connect to LOTS

of RE Investors and Capital groups there. Watch the feeds, comment, post something every now and again. Get a commercial multifamily broker in your area to take you to a property over 5 units for sale. Do a tour, take a video and picts then post on LinkedIn and Facebook RE groups. Just say something like your looking at properties and share with others how your trying to find something Value-add and are looking for partners who want to join you on this growing legacy wealth journey.

Some people are just flat out scared to even go look at a property even when they have money. You don’t need to disclose to brokers or anyone else your full life story. Look ahead (not back) and have confidence.

Fyi - we are in the Mankato Area with some small MF here and invest in commercial RE in Las Vegas and Iowa!

Blessings to your new adventure! 😁

Al M. · Answer

@Jeffrey Donis @Alexander Hammond Jeff makes great points!

Alexander Hammond · Answer

Hey Thanks so much Jason!  I really appreciate it!  I'm currently just below 640, so I will continue to keep pushing to raise that up as quickly as I possibly can!  I really do want to get an investment soon!  But I will research this MN DPA program :) Thanks for all this help!

Jason Wray · Answer

Alexander,

In your situation you might be a good candidate for the MN DPA - down payment assistance program.  That way you do not need money for the down payment or closing costs (within reason).  I would advise getting pre-approved with a bank that offer that program and get your pre-approval letter.  Once you have that all set up you can work with a good realtor in the area or just look on your own for a good deal.  There are some deals that may go to all cash, or a quicker close but you will find one with the DPA program and some patience.

Go to the MN housing website and look at the information on the DPA program.  This will help give you quick tutorial on the program and guide lines.  The biggest step is make sure you find a bank/lender who is approved with the MN DPA feel free to message me or email me for some links.  I am not sure if I can post them here or not so just incase...  Just as a recap the MN DPA program is designed to help families buy their home using state/gov assistance.  They offer funds for the DP and closing costs as long as you meet the credit score requirement (640) and income cap ($120K). (Do not make to much money).

Looking for advice on finding Funding for first investment?

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