Questions about raising Private Money

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Hi All, 

As a new investor, I have a couple of questions regarding raising private money. My business partners and I are putting together a pitch and list of who we would like to start approaching to fund our deals. We have seen many properties and can actually make moves on a couple the only restriction is that we do not have the capital to do it ourselves. We came upon a couple questions that I thought the biggerpockets community members would be a perfect source for. Please review the list of questions below, any help and feedback from past experience is appreciated as I am sure we can learn from all of you. I know that some of these might be beginner questions but I wanted to get an understanding of the different type of scenarios that can arise during this process.

- If an investor wants to invest with us, how do we go about having the individuals contractually bind to the investment, if at all? 

- Should we wait till we have investment opportunities to start raising private money or do we go about pitching private money without opportunities yet? Being a beginner this is something that will be a huge obstacle for us, so I wanted to know how some of you overcame that obstacle? Property first then pitch, or pitch first and look for properties, or 50/50 etc.?

- Once a deal is found, who's funds out of the investment pool are used first, is there a priority based on the money raised. For example, if we raise 50K but only need 30K, how is that decided on who's funds we utilize first for the deal? Not wanting to leave anyone out of the deal who wants to participate, not sure how that step of the process works.

- When pitching for private money do we pitch from the angle of it being an investment pool, asking if the investor would be interested and then once we are finding deals we send those deals to all the investors we met with and see if they are willing to join in on it? or is it suggested that we come to the table with properties and/or pitch an individual property?

- If a deal were to go sour and multiple investors are in on it, how is the money divided up to pay them back, do they sell the property and divide the proceeds? or is the property foreclosed and upon sale the dividends are allocated between the investors?

Thanks again for your help and I look forward to hearing back all your feedback.

-Luke