How to raise money for flipping business?

Question

Are any of you flippers having success with raising money privately for your flips? I am just curious to know how you approached this situation, how you found your private lenders, etc. I have experience to show my successes, but did you put together a formal presentation or something to show potential investors?

Andy Bailey · Answer

I would suggest talking with everyone you know about it even random people you meet. I found my lender by happenstance because I talk about real estate with everyone.

Will Barnard · Answer

My first deal all the way through to all my deals today are funded by my personal private investor network. That took years to build and is now over $20M. If you have experience, which is helpful in gaining new investors, I highly recommend you put together a performance history package. It does not need to be all high end or pretty, but should include the info needed for an investor such as property addresses, purchase prices, construction costs, sold prices, amounts financed for each, and profit results. If you had any losses, include those too and hopefully you did not have any losses for the investors themselves.

Your track record will help you gain more investors. Start with family, friends, acquaintances, business contacts, etc and tell everyone you come into contact with what you do and what you offer. Do not be shy about asking for referrals but do not pay for referrals as that is going to get you into trouble. You also need to be cautious and stay within the legal limits of the SEC. Staying out of court will require you to never lose any investor capital!

John Corey · Answer

While you can find investors or lenders in many places, educate yourself on the regulations for financial promotions.

1. What is a promotion and what you can do so you do not fall foul of the SEC regulations?

2. There is a bit of a cliff edge if you end up with 2 investors in the same deal. Even as lenders you could be crossing the line when it comes to pooling of funds.

3. The more you post on social media, send out emails, etc. the more you are leaving a footprint for future legal action. If you do not know what you are doing, be careful. It is hard to argue later you were not promoting if there is lots of evidence on various forums. No one will care about it until there is a trigger event. Normally that is when an investor is not happy and wants out. They will report you to force you to hand their money back.

Greg Dickerson · Answer

You can find private money lenders at auctions, local real estate meet ups and Facebook groups. You can reach out to title companies and ask if they know any PM lenders and also search recent cash transactions.

You definitely want to put together a professional package showcasing your past projects. Something you can email to potential investors after you have a conversation.

It’s all about relationships. People need to know like and trust you and see you as an expert.

How to raise money for flipping business?

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