As you start doing more and more real estate deals, as an investor (unless you have unlimited resources–the consummate deep pockets), sooner or later you will reach the limits of what you can do on your own.
Some investors find this upsetting, but I like to look at this as a path to boundless opportunity. I say this, because it gets you into the habit of networking to find private capital, one of the best ways to work the business that exists.
Private capital is everywhere and arguably limitless
This is because private capital is not limited to banking institutions or subject to the rules that govern the world of commercial finance. In short, anyone you pass on the street could be a private lender.
Those Americans who are sick and tired of seeing their stock investments go in the tank are all potential private lenders. Anyone who see value in real estate but otherwise doesn’t really know how to proceed is an ideal private lender.
The key here is that you need to go out and find these people. Most don’t advertise or wear t-shirts that say “I have money to lend.” You must first be a promoter of what you do.
For example, apartment houses as investments make perfect business sense because when they are purchased properly, they have proven income streams that are almost “economy proof.”
Unlike other businesses, apartments put roofs over people’s heads, and that gives them lasting value. In fact, it could be argued that apartments are an even better investment when the economy is bad because fewer people are looking to buy homes.
This is the message that you must deliver to potential private lenders, and the business model you follow will be more than logical; it will attract the capital you need.
The pursuit of private capital is critical for your long-term success. So, know that it exists, it does work, and once you know the rules for how and when to use it, the sky’s the limit.
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