Dang...it's Good to Be a Real Estate Investor

There are a lot of choices for what business to be in. You could have opened a restaurant, dry cleaners, consulting company or any other business. But you chose real estate.

When it comes to raising money to grow your business, you couldn't have made a better choice.

Do you think it would be easier to raise capital if you had any other type of company? I highly doubt it. In fact, I think it would be infinitely more difficult.

It's easier to raise private money for real estate investments than to raise money for any other type of business.

Talk to a few business owners in your community and ask them how they financed their start up and growth. Here are some of the answers you are likely to hear:

• Personal savings
• Credit Cards
• Home equity loan
• Business loan
• Family loan (maybe)

One thing that's blatantly missing is: private money.

If you could ask them, how do much do you think these other business owners would have jumped at the chance to have a private investor finance all or part of their investment? They would probably look at you like you were crazy!

Real estate investing is a unique animal in many respects. The industry niches, deal structures and laws varying from place to place are what make it so unique - and profitable. In good times (housing boom, appreciation) you can make a lot of money in real estate and in "bad times" (sub prime, housing bust) you can make a lot of money with foreclosures and short sales. Very few other businesses have this type of opportunity.

And very few (if any) businesses lend themselves as well to financing with private investors.

I have often wondered what the results would be if I could ever do a split test to gauge the responsiveness of private investors to real estate versus financing a website or a restaurant start-up. Just break down the basics of the investment and let the person decide which one was more appealing. My money would be on the real estate investment pulling a 3/1 or 4/1 response.

It's good -no, great - to be a real estate investor because you have the ability to more easily raise large amounts of private money to finance all or part of your investments. All things being equal, people are going to be more naturally receptive to placing funds with you in a real estate deal than if you were approaching them for $100,000 to start your ice cream franchise.

Nothing against other businesses (I've been in a few of them). There are pros and cons to each business we operate in. But, the ability to quickly raise money to expand or capitalize on an opportunity for large profit is a huge PLUS.

If you had to rely on banks, credit card companies or small business loans to grow your company, your wealth would be limited and on a slow-moving train. With private money, you can put your wealth in a Ferrari and stomp on the gas.

Dang...it is good to be a real estate investor!