How to receive investment for a real estate deal?

[Mohammed Hossain]

Hello,

I am currently working on a deal that will allow me to build a 20 unit  condo in Queens,NY. The owner of the property wants to build on it and the current house is paid off; I am only trying to get financing for building the property. 

My questions are? 

What would be the best way to finagling for the construction costs? 

Where would I find the right investor and what would be the best way to approach them? 

Thank you in advance. 

[Jon Holdman]

First, a couple of questions about you.  Have you done development projects like this previously?  How much of your own cash is going into the deal?

What's the involvement of the owner of the land?  Is he going to be a partner in the deal?

Its likely you'll need a combination of sources for money.  You will need a significant chunk of equity cash.  That will likely need to be some cash out of your own pocket.  Then you can find equity investors to add their cash into your pool for getting the ball rolling.  That's a "private placement" and does involve very non-trivial (i.e., "expensive") legal paperwork.  For  the most part these investors will need to be people you personally know and already have a relationship with.  There are now some allowances for advertising, but these then require you only accept accredited investors and you have requirements to verify they are accredited.  You should discuss all these considerations with your securities attorney.  Yes, you will need one.

You will need to develop a detailed plan, get those plans documented and approved by the city.  Once you have your approved plans and your equity investment then you can approach banks and other types of commercial lenders to lend you the remaining money.  Depending on the amounts, you may need more than one lender.