Real Estate Investment Financing Strategies : Leverage

A buddy of mine, Andrew Turner, is building an integrated web based platform for students, parents, and college advisers. His new company, CollegePlanningU, provides things like free SAT prep, the most advanced college planning software on the market, and a mortgage pay down acceleration program all based on cutting edge web 2.0 technology. Andrew and his team have been laboring endlessly to push the company forward, but there are only so many hours in the day. Andrew knows exactly what he wants done in the business and feels that everything is currently at a tipping point.

He is considering leveraging his company to put it on the fast track. Over the last few years, he has operated straight cash and carry. Zero debt. This is a big step for him so he approached me for some advice.

I have recruited millions of dollars from private investors for my company over the years and was happy to help. One of the first things that came to mind was the speed of business today. Nike comes out with a brand new shoe and less than a week later, you can buy the exact same shoe on the streets in China for a fraction of the price. Andrew already knows precisely what needs to happen to get the company’s web applications ready for market. If he were to do it all himself, it could take years. With leverage and the right team of service providers, I asked him to think about the value he would receive from the funds in relation to the importance of speed in business today. Andrew is definitely a minimalist and good financial steward as well so I told him to go for it.

From my experience, I told him that recruiting investment capital was a simple process. We made a power point presentation to guide our investor meetings. It consisted of a business plan, our business model, why it made sense for us to recruit them as an investor, and finally, what we were offering them. Once we had the presentation, a simple formula, “Ask Until” was implemented. I told Andrew to make a list of 10 to 15 people, figure out exactly what he wanted to offer investors, and simply, “Ask Until.” That is all I ever had to do to get funding for our company. Every single person that I met with, regardless of whether or not they invested at that time, was a seed. Many of which took a little while to germinate but have invested and reinvested many times.

Andrew already has a formal business plan and a very professional power point so he is really just a couple steps away. Decide what to offer an investor and “Ask Until.” His enthusiasm alone would get funded if all he did was get out there are start asking.

Real Estate is a big ticket item. Leveraging has been a vitally important tool for our company. Both from private investors and banks. The main thing that anyone has to get over is their fear of rejection. A “no” to me just puts me one more step closer to getting a “yes” and plants one more seed in the soil. The money has been there, is there right now, and always will be available to every motivated, enthusiastic, and organized entrepreneur willing to ask for it.

Using leverage can put you and your company on the fast track. Ask and you shall receive!

Category: Real Estate Investment Financing Strategies