How to find an investor for construction
Many businessmen have made a fortune from scratch, given the following conditions: a good business idea, talent, and … investment from the outside.
Why is a private investor profitable?
Many young entrepreneurs are puzzled by how to find an investor for construction. And this is no accident: attracting private investment is much more profitable than obtaining loans from banks. Firstly, a large amount of money is required for construction, and the bank can simply refuse to lend. And lately, banks have been reluctant to issue loans for business projects. Secondly, the crediting procedure is not so fast: you need to collect a lot of documents, find guarantors, wait for a decision … Thirdly, a large amount of credit involves a lot of interest, which you will definitely have to pay.
For construction it is best to find a private investor. The benefit is that the refund will be made from the profit from the project. As a rule, private investors invest at their own risk and peril if they assume that the project will pay off. And they are ready to stipulate in the investment contract a clause according to which if there is no profit from the project, then there is no return on investment.
But precisely because the risk of uselessness of investment (and especially in construction) is high, it is rather difficult to find an investor for construction.
Where to looking for?
Where to look? The first thing you need to consider as a potential investor closest circle – it’s relatives, friends and acquaintances. If you don’t find a suitable person among them, then there are friends of friends, acquaintances of acquaintances, etc. Perhaps it is through personal connections that you can find an investor.
The advantage of this option is that you will know for certain (most likely) the financial condition of the investor. In addition, even if you are not acquainted with an investor with a very close friend, there will still be more trust than in relations with an investor “from the side”. And of course, such people are easier to convince.
If it was not possible to find an investor for construction through the use of personal connections, then it is time to use the possibilities of the Internet. Today there are many special sites where entrepreneurs are looking for investors. It must be remembered that investors themselves are always in search of good ideas. They have money that they are willing to multiply. So why not do this? Therefore, it is not necessary to think that there are only fraudsters on the Internet and you will not find anything good. But your idea should be really good … Let’s talk about this a little lower.
Note! In many cities, often held various exhibitions, business seminars and so on. It is possible, by visiting similar events, to meet the right people.
Suppose you could interest one or even several investors with your project. But they can very quickly lose interest to you if your idea is not well developed on closer examination. How to avoid it?
Your main goal is to convince a person (most often a stranger) that you need to invest money in your project. The attractiveness of the project is determined by many factors.
The first thing is the type of property and its location. You can find out which objects are attractive to investors on the Internet, using various analytical resources about real estate. Of course, this should be done at the earliest stage – the stage of the birth of a “construction” idea. It is also necessary to find out if there are competitors, what are their pros and cons.
The investor will check your project up and down, before investing in it. Therefore, you should have a detailed business plan, which will contain all the questions of interest to the investor. Briefly outline what usually interests investors the most:
The essence of the project (data on the property that is planned to be built);
Conclusions about the demand for the property, supported by objective data;
Information about competitors and your advantages over them;
Ways of making a profit from the realized project;
What profit will be received by the investor.
But the most important thing is to be able to prove that you are ready to stick to a business plan. That is, it is important for you to show yourself as a person who knows how to manage.