Examples of strategies to entice private investor money

[Seth Knopp]

Hi,

I am interested in examples of how people convinced a private investor to support their project. What are typical % returns for them? What other incentives are good offers? How long is the standard period to pay back the investor?

I always hear “use private investor money” to get started. But how do you attract that? I understand you need to find a good deal. Does anybody have a step by step guide to attracting an investor? Specific numbers that usually need to be reach? Typical contract language?

Any help is always much appreciated! You guys are the best!

Thank,

Seth

[Brit F.]

@Seth Knopp,

The most straightforward way is to start asking private investors what would make a deal attractive for them at that time.  Ask them what returns they are getting now and if they are happy.  Just have a casual conversation, but start with people you already have a relationship with who trust you, and build your network from there. 

With the recent (and likely worsening) stock market volatility, lots of investors will be looking for alternatives.  Ultimately, we're all interested in the same thing: equity upside and cashflow.  You just have to find the right combination of terms to solve mutual problems for you and the investor(s).  Consider yourself a problem solver, not 'a guy with a deal'.

To go more in depth, listen to the BP podcasts about private money, and look into the book 'Raising Private Capital' or similar.

Get contract language from a real-estate lawyer.  Paperwork is the easy part.