Raising Money for a new devlopment

[Anthony Caleca]

Hey so i have posted about 2 or 3 months ago about getting into the devlopment side of real estate with my father, we where looking to devlop a small to medium size luxury complex in NYC (where we live) but raising money has seem next to impossible. I am not going to lie i kind of have no direction what so ever on how to raise or obtain the money for a project like this, so we decided to start off on a much smaller scale and start with single family home since it will require a lot less money. The thing is i am trying to research and learn how to raise money, i have reached out to numerous major Developers in NYC who all speailize in the projects we are eventually trying to get into, but either never get response or they agree to meet and then cancel on me.

what i have learned though is that nobodys going to give us money based just of an idea, people who are serious about giving money want to see exact projects and numbers, so they can perform their own due dilligence and see if the numbers work and the deal is actually capeable (which i understand completley) but the problem is no major broker will entertain the thought of wasting time to find deals or show us properties to someone who does not have serious capital to purchase them.

so pretty much brokers wont find or show me properties because i dont have money, and investors wont give me money because i do not have a solid property to show them. I am so lost and have no direction and do not know where to go from here. Thats why im trying to reach out to local devlopers to ask them questions and pick their brains. Please help be honest with me I do not mind critizism or advice. This is my passion and will refuse to give up so any advice or critizism helps!

[Jon Holdman]

What is it you're bringing to the table?  If you're looking for a payday, you have to be bringing something to the table.  Money is always a good choice.  For a project like this (and I have an investment in a deal along these lines), you are going to have to have some of your own cash into the deal.  Typically you would find a parcel of land, acquire it (or otherwise gain control of it), and then create a development plan.  Then you would pitch the plan to potential investors.

So you'll need some money to gain control of the land and money to come up with that plan.  That might be funded by personal loans, cash, or money borrowed against some other asset.

As you're discovering, a great idea is worth very little.  Anyone can say "I want to build something on some chunk of land."  You need to be further along in the process than that to get any interest from either land owners or investors.  That usually starts with a market assessment of what sort of properties are in demand in an area.  Then, what would it cost to acquire the land and build on it.  Then you start identifying potential tracts of land you would use as a starting point.  You have to figure out regulations and agencies you're going to have to work with (often a big obstacle, my project has been tied up for years now working with cities and counties on roads, utilities, drainage and getting approvals from neighbors.)  There's a lot to making a project fly, and construction is really a very minor aspect of it.  

Are you capable of working up all these other details about the project?  Do you have cash to bring to the table?  If not, you may be trying to reach too far for now.  Start with a smaller project where you do have enough of your own cash to get the ball rolling.  Even a rehab project with a generous hard money lender is going to require significant money of your own to go into the deal.  But if you start there and start developing some experience and building up a nest egg, you'll have a better shot at moving up the food chain.