| Your best source of private money is from high net | | | | your securities under exemptions from registration |
| worth investors. This shouldn't take much convincing. | | | | (far less paperwork and hassle with SEC filings). This |
| Unfortunately, far too many real estate investors | | | | is a BIG plus when you are raising money. |
| concentrate their private money raising efforts on | | | | Another benefit of raising capital with high net worth |
| non-accredited investors. | | | | investors is that there is less likelihood of redemption. |
| There is nothing wrong with raising money from | | | | Redemptions are when investors want to take their |
| non-accredited investors. I have had private investors | | | | money out. Imagine having $1,500,000 in private |
| in both accredited and non-accredited status. If | | | | money invested in a commercial project and one of |
| someone wants to invest $50,000 of their $150,000 | | | | the investors wants to pull $200,000 because their |
| net worth with you, no problem. Just make sure you | | | | 401(k) took a hit. Not good. You then have to find |
| make the proper disclosures and any filings you may | | | | somebody to replace the investors position, which at |
| need to do with your state securities regulator. It can | | | | the very least may disrupt the project. |
| (and should) be done when the situation is right. This | | | | High net worth investors also better fit the "able" |
| could be all the time for you or none of the time. | | | | aspect of investors being ready, willing and able to |
| Accredited investors, as per SEC definition, are those | | | | invest money in order for you to invest time and |
| with a net worth in excess of $1,000,000 (excluding | | | | effort bringing them in. This is very important |
| primary residence), joint household income of more | | | | because you want to get the investors money into |
| than $300,000 ($200,000 for individual) in the most | | | | play quickly after they express interest in moving |
| recent two years. How do you find out if someone is | | | | ahead. If they have to juggle funds around between |
| accredited or not? By having each prospective | | | | accounts or combine funds and scrape the money |
| investor complete an Investor Questionnaire prior to | | | | together, you might spend valuable time coordinating |
| receiving the intimate details of your opportunity | | | | things and the investor may get cold feet. |
| (you can accomplish this via mail, fax or in person - | | | | Again, there is nothing wrong with having |
| it's pretty easy and can put investors at ease). | | | | non-accredited investors. I am making a stronger |
| You see, marketing your real estate investment | | | | case for you to work toward having accredited/high |
| opportunity to people that are ready, willing and able | | | | net worth investors that make up the bulk of your |
| to invest with you is very critical to your success. | | | | investor base. Your business will be all the more |
| With accredited investors, you can more easily offer | | | | profitable in the long term as a result. |