Hello,
Location: Atlanta, GA
I have secured a contract on a factory building in a re-gentrification
area and wish to convert this into loft-condos with included covered
parking in the building.
I have used my personal money ($25,000) as earnest money on the
contract, and now I need to raise $2MM to secure ownership of the
property (1.5MM sale price) and begin construction ($500K) so that I
can presell 2 of the 10 units I will place in this building.
I have discussed the project with several realtors in the area and
each one is highly confident that the units I plan to build will sell
in the region of $450K on the low end to $500K average, to $540k on
the high end. They are currently trying to woo me to use them to list
these properties. The area is primed for a development like this, with
similar but not competitive projects underway.
I've already met with the local UDC (Urban Development Committee) and
the local Homeowners Chairman, and they are keen to see my project
start since it will aid the overall plan for the area.
Environmental studies and engineering studies are completed.
Feasibility study is in the works now.
I know I can go the conventional financing route. I do not wish to do this.
I have two more projects like this that I can secure (with a contract)
once I have this project underway.
This is the first project for my company. I have never "raised money"
like this before. I will be able to raise a decent portion from family
and friends, but I'll fall short in this regard.
I have a solid background in construction, and my partner was a senior
manager for a $300MM power plant developer.
I want to establsih a group of accredited investors, say 40, to put up the $2MM.
I can get the construction loan, once I have the property purchased.
I've already got the committment for that.
My projectios (very simplified are as follows):
1. Initial purchase price of property - 1.5M
2. Construction Costs - 1.5M
3. Retail sale of units - 4.5M (conservative)
Expected profit - $1.2-1.5MM after costs (legal, etc).
If I split the profits 50/50 with the investors, that means about a
30% profit for them on their money.
(Investors would be buying equity in the company that buys the property).
I have already retained an attorney firm to prepare the PPM for this
project to assure everythign is legally constructed and proper. They
are a very highly respected securities and real estate attorneys firm.
My question, is this, How can I reach accredited investors, or brokers
representing accredited investors to present a project like this?
My 30 day window is simple - closing is in 30 days.
Searching the internet, I get the feeling that many of the people
offering "assistance" are charlatans. I want to establish a group of
investors that I can provide a solid return for, in order to move to
bigger projects.
I should put a disclaimer here: This post is not a solicitation for
investment or an offering of securities. It is simply an explanation
of a situation in order to get advice.
Thank you for your time.
Sincerely,
Tony. |
Clarification of Question by
tonypagola-ga
on
28 Jul 2006 12:57 PDT
Hello there,
Thank you for the quick and comprehensive responses. I'll address both
here if I may.
1. pafalafa-ga
I was not aware of Arcapita - thank you for pointing them out to me.
I'm very familiar with some of their projects. I think they're not
going to look at something as small as I'm starting with. In time,
they'll be on my radar for sure.
If you can think of other companies to do this then I'm all ears :-)
2. david_wells_53-ga
I have one person who will put up the entire 2MM and 3MM if I need
them too. That is not my goal.
This project is a proof of concept. It involves a mix of construction
and financing (mortgage - for which I'm licensed) to ensure quick and
profitable resale.
I'm trying to develop a model that can be replicated and thereby expanded.
If I make money for one investor, he'll tell three or four people.
If I make money for 40 people, now my network has expanded to
potentially 120-160 people. Thus, I'll have a broader pool to tap into
for bigger projects in the future.
I have a second similar project lined up, similar in scope and dollar
value to this project that I want to finance after this one. After
that I have a project that's roughly 4 times the size. That's why I
need the pool of people.
I'm planning on establishing a reit once we step beyond the two minor
projects, and we've established ourselves with a track record.
I have the credit to get the financing myself. I'm putting plenty of
skin in the game as it is, (beyond the downpayment) but I want to
establish a "fund" pool of sorts.
I hope this clarifies a little.
SBA won't work, because that's the same as getting an Acquisition and
Development loan which I can obtain already, and plan to should the
funding process I plan to use fall through. The building will get
developed regardless, I'd just like to make it a stepping stone for
more profitable ventures in the future. I'm after a replicable model.
Thank you again,
Tony.
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Clarification of Question by
tonypagola-ga
on
03 Aug 2006 07:36 PDT
wordsmith:
>>and make it profitable than to have it hobble along as you
>>search for a whole slew of investors. If you do it well, you'll only
>>need a few investors to spread the word. Trust me, word spreads.
I can take this project from start to finish with my own credit and
leverage if I want to. This project is not "waiting for investors"
although I understand your point exactly. It's far from hobbling - we
will close at the end of this month, and are talking to architects and
designers this week. We'll secure them by the end of next week.
My thinking was purely this: I'd like to do projects like this on a
regular basis, increasing in scope/size with each project, with the
possibility of establishing a reit around project 4-5, in say 5-6
years from now.
I'm banking on "word spreading" to help me do this.
Thank you so much for your leads - they are most helpful.
Tony.
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