Real Estate Investors
Do you need an angel investor for your real estate
Angel investors are wealthy individuals that usually fill the gap in funding between the initial round of family and friends investing and the time when venture capital firms start getting involved. Angel investors use their own private money, while venture capital firms use other people’s money. If you need between $10,000 and $1,000,000 for your real estate company, an angel investor may be exactly what you need.
Before you begin the search for an angel, ensure that you have a company that is attractive to angels. Angel investors need high growth companies with lots of revenue in order to have a chance at the returns they are seeking. It is not uncommon for angels to require a 25% return on their money annually. If your real estate company cannot generate this type of return, you will have a more difficult time finding investors.
Make Your Real Estate Business More Attractive to an Angel Investor
First, you should try to find their motivation for investing. Once you know this, you can tailor your presentation to them. For example, if an angel investor wants to invest personally in real estate but simply does not have the necessary time, it will be easy to show him how your business will do virtually all of the work and he will still get great returns. However, do not be surprised if he requires a large equity share or a significant portion of the profits. After all, it is his money that allowed the deal to be done in the first place. As the saying goes, he who has the gold rules.
Maybe they just want to help another entrepreneur
succeed. The angel investor would
probably want to be in an advisory role.
Perhaps a seat on the board would be necessary or a less formal
advisory position within the company would suffice.
What unique value does your real estate company provide?
You need to be able to sell an angel investor on the value you personally bring to the real estate company. Maybe you have wide contacts or are very familiar with local real estate prices for the last 15 years. Maybe you know the language if you plan to invest internationally. Regardless, it is imperative that you provide the angel with the unique value your real estate company will provide.
Ok, your business is attractive. Now where can you find angel investors?
The primary means by which entrepreneurs connect with angel investors is through personal contacts. If you do not know any angel investors, begin asking everyone you know for referrals to potential investors.
Another source for finding angel investors is the internet. Most angels have a preferred investment amount, industry, and only invest in areas close to them (i.e. a few hours drive or less from your company). The Invstor.com Network (www.Invstor.com) is the largest online presence connecting entrepreneurs, investors, advisors, job seekers and anyone else in the startup community. With a purchased subscription, you can access the contact information for any other member. Using the search function you can find, for example, angel investors for real estate that want to invest within a certain range. You can also search by region of the country or the stage of investment.
Alternatively, you can post a “Request.” A Request is a brief advertisement similar to a classified ad that gets sent to targeted investors. If some angels like your opportunity, they will contact you and you will be on the way to taking your business to the next level.
If you need a substantial amount of cash for your real estate business, a professional angel investor will probably be necessary. In order to get funded by this type of angel, you will need to have covered many of the basic bases before contacting them. This means you have a solid business plan backed by experience and preferably some credentials. Finding an angel is usually a matter of networking until you uncover an angel that is a good fit.