Angel financing is just what it sounds like, it's the alternative that comes to the rescue with funding that investors will not find anywhere else. And these investors bring more then just money to the table:
You also get free advice & mentoring at your fingertips.
You'll gain expert business contacts.
And angel lenders will be there for the long run.
Most real estate investors get angel funding to have capital to grow their business, for down payment money to buy properties or for straight acquisition and inventory building.
Angel investors are perfect for financing real estate because of their lending amounts, timing, and collateral to risk assessments. You'll be able to secure funding for all types of investments.
Angels invest for the long term. Build strategies into your business plan that contain buy and hold investments like rental properties and apartment buildings.
For extra value, look for angel investors with a real estate background or geographic location that meets your needs.
Angels use their own private money in exchange for an equity ownership. They're looking for companies with the possibility of rapid growth and like to see a return of 20 - 40% on their investment over a 5 to 7 year period.
Be prepared. It'll require a proposal and a solid business plan.
A current appraisal or independent evaluation of the property.
A qualified management company assigned to take on daily operations, rent roll and loan amortization tables that track positive cash flow and anticipated ROI. And an executive summary with accurate information and full disclosure.
Most people think applying is complicated but it does not need to be. The process consists of the paperwork, application processes and reviews. To increase the chances of approval, it's best to have a professional mortgage team put together and submit your loan.
If you choose to do it yourself then automate and use software to make the process simple and less time consuming. Plus you'll look professional through out the funding process.
In some cases, a meeting with the angel investor will be necessary. At that time have ready a 30 second “elevator pitch” describing your company and the benefits and services it offers.
Also, a PowerPoint or Video presentation followed with a question-and-answer session is recommended. Tailor your proposal to meet the requirements and interests of your individual perspective angel investor.
Is jumping through all the hoops worth it? You bet ya.
Because once you secure angel financing, getting more is easy and the sky is the limit.