How To Find Angel Investors For Real Estate
How do you find angel investors to fund all your real estate deals? Well friends, we got that information coming up right now for you on limitless TV. First of all, what is an angel investor? it’s an angel with a lot of money? No, angel investor… I don’t even know where they get their name from so I’ll make something up. It’s someone that has a lot of money that comes in at a clinched moment on a really good deal and they’ve got very low criteria qualification they’ll throw down a big sum of money and they’re hoping to make a lot of money. So you’re searching for this idea of, “well, how do I find an angel investor in real estate?” and an angel investor is actually something that is really appropriate for a cash infusion into a business, a business that’s pre-ipo going to get listed on the stock market and grow. Angel investors have other names in real estate sometimes they’re called, “the dude” and “dudettes” that do hard money loans they can also be called loan sharks. Why? because angel investor implies a short term loan and a short term loan because, their money’s not going to be out very long they’re going to want to make a good amount of money on it. They’re often going to surpass usury laws. They’re going to charge points on the front and then some kind of interest rate. Let me break that down for you let’s say that I found a really amazing real estate deal I’m crushing on. It’s got $40,000 of equity I can turn it for a quick flip and make what I hope to be $30,000 realistically. Well, I need $150,000 to buy this home and so I need an angel investor. I want to skip banking, I want to skip financing, I just want to come in and buy this. Well, an angel investor you might find one that comes in and says, “well, that’s a really good deal and I want to get paid two points on the front, and I want to earn an 18% interest rate”. So I just think about this for a moment two points is kind of what it sounds like. A point is a percent so two percent of one hundred and fifty thousand dollars is three grand. So now, my $30,000 profits just got cut down by 10% because 30,000 to me by virtue of the points on the front, is $3,000 off so that’s $27,000. So, they’re not just going to want points on the front now they’re also going to want to make an interest rate on their money. And then real estate, one of the things you need to be really careful about is that it’s easy to look at a deal and think, “oh my gosh I’m going to flip this” it could be, it could be done in like 60 days. It could be done in 30 days. Yeah it could be done in six months, it also could be done for a year. And so, angel money can sound good but if two months turns into six months, well, what’s 18 percent on a hundred and fifty thousand dollars? just going to do some some quick math right here. You’re probably looking at some around twenty six thousand dollars. If it were amortized over a year. So if it takes six months, that’s thirteen thousand dollars. Now remember, I got paid, I already paid them three grand, and then on top of that let’s say I’ve got another thirteen grand, so now that’s sixteen thousand dollars. Now my thirty thousand turned into what? now turned into fourteen thousand dollars because, I paid sixteen to them. So far, it’s like their business partner out of fifty five percent ownership because they’re getting more. But let’s say that you also have to lower the price ten thousand dollars to make the deal go. So now, all of a sudden, my fourteen thousand just turned into four thousand and maybe you calculated some fees wrong and brought in a realtor and they have their fees, and those fees are seven thousand dollars with concessions and everything and all of a sudden four thousand turned into negative three thousand dollars. Well I I don’t want to bop anyone’s bubble but I just gave you an example of a home that looked like at 40 thousand dollars of equity. You wanted to make 30 grand on it and by virtue of bringing in an expensive angel investor, it got turned into what? it turned into a little. So I’m going to give you some advice on what it is that I would do and also what you need to consider with angel investors. Number one, bring in. Write this down. Bring in an angel investor if you have sufficient margin. And then number two, if you don’t have the margin that you think, then you want to convert your angel investor into a partner. Instead of them being a hard money loan where they get paid no matter what. Whether the deal goes really good, or really bad. If you bring them in as a partner, you’re going to split whatever gets made. Now if the deals really juicy this could mean that you’re giving up more than you’d like but it also means that the deals a little riskier now you’re sharing the burden of that risk and, and you’ve made that really plausible. So, that’s what an angel investor is and what I’m going to do next is I’m going to share with you how do you find an angel investor, how can you convert them into a partner because when the deals good enough, the money is always available if you know where to look. Now, if you want to attract an angel investor you got to package the deal. And remember, angel investors are only going to be interested if there’s what’s called a margin of safety there’s what Warren Buffett says is the secret to his multi billions of success in real estate and business. And ultimately, it can be summed up with buy low, sell high. And the question is, how low and how high? for example, well I bought it for nine dollars and I sold it for ten okay that’s a $1 margin of safety that’s a very small margin. I put it for three dollars I’m selling it for ten. Oh, I’ve got a $7 margin of safety that is a bigger safety margin. An angel investor is going to want you to demonstrate very quickly and easily with all documentation that the home is worth what you think it is and that you have the right strategy on it and if you don’t submit the right documentation, they’re going to shoot you down and just say you’re too much of a novice. So what you want is probably a summary page of what is the deal, and what is the strategy. I’m buying this home For X attached as a comparable Market Analysis fixed up at, why we’re going to the strategy is to put these dollars into it, repair it, and we believe that based on the market we’re in, these things took X period of time to sell, we think it will take this period of time to sell and these are the games that we can make and here’s what you get to make off of it. Okay that’s summary backed up by the right numbers, that’s an attractive package. So one more time, this is important, is I need to summarize to the angel investor, my possible investors, what the deal is. Number two, I need proof so the comparable market analysis of what is it worth, what could it be worth, the strategy. How much am I going to put into it? If you say that you’re going to put twenty thousand in the property, show them. It’s for a sink, its for granite, it’s for this, it’s for flooring, I need to, you know, put a railing up on the stairs. And then finally, what’s in it for them? What’s in it for them? so I’m looking for an angel investor who come in at this, and at that. Who will get paid this, and who will get paid that. And that’s what you’re going to submit. Once that package is put together, here’s the answer to your question, where do I find angel investors? friends, if the deal is good the money will become available. If it’s not good, the money will not be available. It’s just that simple. We live in a very small world today. I’m going to give you by the way just a really tiny hint on something very real that you can do you may want to set up an avatar for something like a Facebook account that is really strictly for business and I do this on my personal page but I balance it out with just how I interact with my people and and you’re on this YouTube page. It’s dedicated for making money in real estate. Well, here’s something simple you can do. Take your Facebook page and go to different investor communities because they’re on Facebook and they’re online and go tag all the people and private message them, and add them. Add me, add me, add me, add me. There’s a lot of people looking at building their social network and a lot of will just say yes. So if I’ve invited thousands of people that are my ideal people that I want to work with on deals, then guess what I have? I now have a Facebook page full of people and some of them are going to have money. Now when I go to that Facebook page and I drop the deal and saying, “hey got a house worth X, can do Y. If you’re interested on playing angel investor hard money or want to partner with me message me.” the people that message you, you send them the deal. If the deal is good, the money will appear. That’s just one way of doing it but frankly that’s one of the easiest. Now, a couple other suggestions is that you can go to other social media groups, you can ask to join online real estate forums and drop the deal on them and just between that in and of itself going to the real estate associations and doing that, that’s more than enough networking for a good deal to get an immediate traction if the numbers are there. Now if you think you’ve got a good deal, and no one’s biting, it’s probably because your standards are a little bit low on your what you consider a good deal to be. If I were to give you just a real quick bonus ballpark on that I would say that if you have a 10 to 20 percent margin, that is likely meager. Having it anything over 20. 20 to 30 percent, you’re getting very interesting and you’re going to find someone for th deal. If you’re over 30 percent, it’s going to be a cakewalk. And so, that’s how you find angel investors and with our world today, it’s never been easier. You got this! You can do this! So go make it happen. And that my friends is how you find angel investors. now I got some details below that you can click on if you want some upon getting your deals funded. Learn about our real estate program and how wecan make that happen for you. This is Kris Krohn with limitless TV signing out. See you tomorrow.