I’ve been writing about buying apartment buildings with money from private individuals. In a response to my last article “The # 1 Secret to Raising Money to Invest in Apartment Buildings” another BiggerPockets member asked “how do you find local investors that are interested in discussing deals?”.
Great question, let’s talk about it!
For several years before getting involved with investing in apartment buildings, I was renovating houses, fixing them up and reselling them. To finance these “rehabs”, I raised the money from friends and family. The minimum investment was $25,000 and paid I them 12% to 15% simple interest, guaranteed by the house. The title companies took care of the promissory note and recording the deed. As I was eyeing commercial real estate, I polled my existing investors to see which ones were interested in buy-and-hold commercial real estate.
I was disappointed to find that only a few of my existing investors were interested. However, I found that people I knew were able to refer me to people who were interested.
The lesson here is not that you should start small first (with rehabbing houses, for example) before moving into commercial real estate. Rather, the lesson is that you should leverage your existing sphere of influence to achieve what you’re looking for – in this case, to raise money for apartment buildings or doing flips.
In short, the lesson (which was also confirmed in a recent Podcast with Mike Simmons, ) is to talk to everyone you know.
It’s surprising who your family, friends, neighbors and co-workers know. Never discount anyone – tell everyone you know what you want to do and you will be surprised at what will happen. If someone refers you to ..