Use Private Equity to Get Deals Done

We have all heard the terms hard money and private equity... but do you know what those are and how to get your hands on capital when you need it? Although they get a high rate of return, they are sometimes the only way to get your prospective deal financed. They are in a risky business and are handsomely compensated as a reward.

For instance, if you wanted to buy an apartment complex or retail center and the bank wanted you to have 25% down as an equity position, you could seek out a private equity partner to come up with any cash you were lacking and in some cases, ALL of the cash if the deal is strong enough. The kind of return that these specialty type of lenders want can vary greatly so once you have secured the property with a contract, feel free to shop around. It can be a cut-throat business so be sure to have the property “tied-up” in contract before submitting your package to the lenders or else you may find that you mysteriously lose out to another buyer. Include in your package, among other things, an attorney prepared non-disclosure and non-circumvent agreement to give a little more professionalism and a small layer of protection.

When building your investor package you will need to have current financials on yourself, your credentials (resume), pro-forma on the subject property outlining current revenues and expenses (get this from seller), and a detailed vision of how you will improve upon the current concept in place. Do these things and let the hard-money and equity guys compete for your deal. If it’s truly a good deal, you’ll know it!

Anyone who has had experience with these types, please post your story!