Private Money Investors in the JV Network Company network have become more cautious in their willingness to invest since the global economic crisis. Although they are still interested in placing their private money into good projects, they are taking more time to do their due diligence.

Private Money Funding At 100% Is Rare

The norm before the economic crisis was that a private investor would be willing to fund the entire project. That’s 100% funding. Now the private money investors are only willing to fund at 95% to 98%. Some private money investor may still fund a project at the 100% level, but that is rare in this economic climate.

Private Investors Use Business Trusts To Fund Projects

The other big change in the way many of the private money investors are making their offers to fund projects is that they are using a business trust type of arrangement as a means to provide funds.

Private Investors Will Provide Private Money For 95% To 98% Of Project Needs

What this means is that the request for funds will only be funded at 95% to 98% of the amount requested, and that the remaining 2% to 5% needed will have to be acquired from some other source prior to the investor giving any funds. In addition, the 2% to 5% must be in cash and placed into an escrow account before proceeding to get any funding documents prepared.

The Current Economic Climate Requires 2% To 5% Cash To Get
Big Money Funding

So in this economic climate you now need to have 2% to 5% of the funds necessary to make your project work already available prior to gaining any big money for funding a project from a private money investor in the JV Network Company’s investor network.

If this type of arrangement is something that you can live with, then the private money available through Access to Private Money may be able to get you to funding you want.

It seems like we have at least one question a week asking about the requirement for meeting fees when meeting with a private money investor. The person making the inquiry says something like this, “I can’t pay the meeting fees, so could you have them waived?” Then there’s the question like, “I’m not paying for a meeting fee until I know the investor will fund the project, so couldn’t the meeting fee be rolled into the fee due when the project funds?”

No Waiver Of Meeting Fees

Access To private Money can’t waive what we don’t have. The meeting hosting fees are a requirement of the JV Network Company we do business with for the private investors. Since we don’t have the right to waive the fees, we are not in a position to grant a waiver.

We Can’t Give What We Don’t Have

Access To private Money can’t give away what we don’t have. We are also not in a position to subsidize client’s meeting fees. Since no one at Access To Private Money is present at the investor – client meeting, we can’t control what goes on there. As stated in Private Investors and Private Money Meeting Fees the meeting fee goes to the JV Network Company, and Access To Private Money can’t risk what we can’t control.

So if you are thinking that maybe you are the client with a project so good that there has to be an exception for your project to be submitted, consider what you’re asking. Access To Private Money can’t give up what it didn’t have to begin with.

The Rules Of The Game

We all live by rules, and sometimes we don’t like some of the rules. But if you want to play the game of finding a private investor using the network of private investors assembled by the JV Network Company you have to play by their rules.

You have two options, play by the rules and submit your project for consideration, or find another game, another source for private investors. It’s really that simple.

If you choose to use Access To private Money to find private money investors we will be happy to submit your project for you. To get more details about the submission process you can request private money funding information and receive the PDF file Joint Venture Funding Guidelines and Procedures.

Private money is still out there. There’s a group, First American Financial Management Co., in Charlotte looking for small banks. They recently bought Community Bank of Rowan last week for about $16 million.

So, if you have the right kind business opportunity you can find private investors interested in funding your business. 

Tony Plath, banking and finance professor at UNC Charlotte, said that private investors usually wait until the banks hit bottom before they invest. Right now private-equity groups are beginning to get into the banking community, and that’s an indication that the recession is reaching the bottom.

For more information see Charlotte private-equity groups on the hunt for small banks.

If you think that private money could help your business, then  Access to Private Money may be able to get you to funding you want.

Remember the rage of the tube socks where the advertising was “one size fits all.” I recently checked online, and you can still get tube socks that say “One size fits all.” So I guess they are not all out of style.

One Size Fits Most

When it come to socks, the “one size fits all” size seemed to fit most people. But for the really small and the really large, they didn’t fit very well at all.

Private Investors Are Not All One Size

But when it comes to Private Investors and Private Money Lenders, one size doesn’t fit all. It seems simple enough. People are different. They all have different likes and dislikes, ideas and notions of what is reasonable under each circumstance.

But visitors to AccessToPrivateMoney.com keep asking:

“What Do ‘The Investors’ Want For ROI?”

The simple answer is “it all depends.” Each investor has an idea of what he or she would like to make with his/her money. The investor looks at the available projects and decides which seem to be likely candidates to give that type of return. If a project piques the investor’s interest, then the Private Money Investor will want to evaluate it to determine whether the investor can get the return he or she wants.

So… How Is The Private Investor Return Calculated?

Since each Private Investor makes his or her own choice about the return that he/she wants, there is no standard calculation for the ROI. However, every investor wants to be able to share in the profits of the project. That’s why they are investing in the first place.
They are not making loans with a set interest rate. So, they expect to get a percentage of the profits. How much an individual investor wants is up to that investor. But it falls in the range of 20% to 50% of the profits.

Will The Private Money Investor Get Their ROI?

Each project is evaluated by the investor to determine what percent of the profits will give the investor the overall return they want. And it can vary project by project because of the time and risk factor of the investment. Then, if the project would be able to generate the return the investor is seeking, the investor calculates the percentage of the profits that would give that return.

Why is 50% The Upper Limit?

Although it is not a hard and fast rule, the private investor doesn’t want to take too much out of the business. The investor doesn’t want to cripple the business by taking too much out. Also the investor doesn’t want to take so much out that the business owners have no incentive to make the business succeed. It’s a fine line to determine what’s fair and what will give the investment results the investor is seeking.

Every Investor Is Different

Back to the “one size fits all” answer that visitors to AccessToPrivateMoney.com want. Since there is no standard Private Money Investor, there is no standard ROI that an investor wants. The only way to find out what an individual investor wants is to submit your project into the private investor database and see who shows up as interested investors. Then at the investor meeting, that particular investor will say what that investor wants for a return. That’s the ROI for the project with that investor.

The FAQs http://accesstoprivatemoney.com/faqs.htm#f5 have been updated to give a short answer to this complex situation.

Although not all private investors use the banking system to obtain their funds to invest, many do use it.

Take the situation where the private investor has a corporation with a business line of credit.  The corporation exercises the business line to get money to invest.  Then the private investor uses those funds to make private investments.

In that case the private investor is essentially doing what the banks have been doing.  The private investor is making money on the spread of the interest rate they got on the credit line and the amount they charge to the client seeking private money.

So what happens when those credit lines are diminished or cut out entirely?

The private money dries up just like the money in the banks.  So the private sector is also affected by the banking crisis and the credit crunch.

Although I don’t’ know for certain how the investors in the investor network get their money to make investments.  It’s reasonable to assume that at least some of them are using their corporate holdings to get the cash to invest.  This means that their money supply is also smaller.

So the private sector does follow the banking industry to some extent when the banks fail or refuse to make new loans or lines of credit.

There’s a recent post on The Money Code Blog which talks about how the governments are getting into the banking business and what effect that may have on the future of the whole money system.  The post, “When The Government Gets Into The Banking Business” is worth reading for the insights about what this means for the future of credit and lending.

It may even change the future of private money investors.

Today the world of finance is in turmoil over not enough money for current projects.  Consider the recent article posted on MSNBC, Credit crisis halting commercial construction Investors pull out of $5 billion project to build tallest building in Vegas.

In this article the Clise family in Seattle had to stop their project.

Clise Properties Inc. halted discussions with potential partners in April after it became clear that most investors wouldn’t find reasonable financing to develop the site with the company during a global credit crunch. Interested investors had to put up more than $600 million just to compete for the opportunity.

Again another large project failed in Las Vegas.

Last month, Australian gambling firm Crown Ltd. backed out of a $5 billion project to build Las Vegas’ tallest tower because of financing issues. The company held a 38 percent stake in the joint venture with Texas developer Christopher Milam and private-equity firm York Capital Management and will have to write off about $42 million related to the investment.

Boom Areas Turn Into Bust

In addition, the boom areas of a few years back are turning out to be busts.

Commercial real estate projects in Denver, Phoenix, New York and even Donnelly, Idaho, have run into similar snags, while developers in housing-bust markets like Florida and Southern California have axed smaller projects.

You Are Not Alone

So if you think you’re having a hard time getting the financing you’re looking for you are not alone.  The world of both public and private money is playing it very cautious these days.  They are taking a lot longer to evaluate any project, and they are really looking closely at the business plans and the areas to be developed.

What does this mean for your current projects?

Any project you are proposing for private money funding needs to really be air tight.  Make sure all your i’s are dotted and t’s are crossed.  Cover all the marketing plans with extensive research to show there will be a profit.  Have a white paper ready to explain how you’ll address any negative issues in your plan. Show that the principals in your plan really have the expertise and past experience to pull off the project.  And make sure your projected figures are conservative.

There still is money available for good projects that have the proper back up in documentation.  But the era of the “No Doc Loan” is gone.  Be prepared with full documentation and you still may be able to get the funding you’re seeking.

In terms of sources for funding our JV Funding Investor Network only requires a minimum of an executive summary and business plan to determine whether any investor is interested.  But after that point, you’ll need good documentation when you meet with an investor.

So if you’re still looking for funding, AccessToPrivateMoney can provide the opportunity to meet with an interested investor who may actually fund your project.

You have probably heard the phrase “there is no free lunch.” And that is true in almost any endeavor. For the Private Money Investor or Private Money Lender, finding a project to invest in requires a lot of work and many times a lot of up front expense.

For the person or firm looking for private investors to fund their project there is a lot of time and expense involved there too.

Private Investing Costs Money

So starting or expanding any project gets expensive for both sides. What does that mean to you? It means that “there is no free lunch.” You need to develop a good business plan. That costs either time or money or both. Then you need to find a Private Investor. That also costs time and/or money.

We at Access To Private Money work with a JV Network Company that has put together a Private Money Investor Network. This cuts down the time involved in finding the private investor. However, that company gets paid in 3 ways:

1. Investors pay a fee to be able to view incoming projects
2. Clients seeking funding pay a meeting hosting fee to meet with the investors
3. When a project is funded by an investor, the investor pays points on the amount funded to the JV Network Company.

What You Pay … And Where It Goes

To work with us at Access To Private Money to get your project funded you MUST pay the non-refundable meeting hosting fee to the JV Network Company before you can have an investor meeting. That fee goes to the JV Network Company to cover the costs of running the investor – client meeting.

Access To Private Money has NO control of the actual investor – client meeting, and the requirement for a fee by the JV Network Company. In addition, Access To Private Money cannot make that fee payment for any client seeking funding. And the meeting hosting fee cannot be paid as part of the fee due to Access To Private Money when the project is funded.

When and if the project is funded through the Private Investor Network you pay points to Access To Private Money on the amount actually funded. These funds come out of the money the investor is putting into your project at the time of closing the deal.

The amount of the meeting hosting fees is spelled out in the PDF file Joint Venture Funding Guidelines and Procedures which you receive when you request private money funding information.

When you’re looking for funding for your project from a Private Investor or Private Money Lender you have to be able to show the Private Money Investor that you know what you’re doing.

No one is willing to give away millions of dollars to someone who doesn’t have a Good Business Plan.  Just think about it.  If someone came up to you looking for millions of dollars for a great idea, wouldn’t you want to know a whole lot about that idea before turning over your money to that person?

Private Money Lenders Need More Than Good Ideas

A terrific idea is not a business plan.  Just saying you have a way to make a terrific return on the Private Investor’s money isn’t good enough.  The investors in the JV Funding Private Investor Network only need to see a Business Plan and Executive Summary to get interested in your project.  But it has to include enough detail to make it believable.

So what’s in a Business Plan?

Many people seeking funding ask me that on a regular basis.  Some even want me to assist them in preparing their business plan and executive summary.  So for those people who have their idea and have not put together a good business plan in good English, here is a reference of what needs to go into a business plan.

Entrepreneur.com describes a business plan as:

“Simply stated, a business plan conveys your business goals, the strategies you’ll use to meet them, potential problems that may confront your business and ways to solve them, the organizational structure of your business (including titles and responsibilities), and finally, the amount of capital required to finance your venture and keep it going until it breaks even.”

For more detail about what’s included in a business plan see the An Introduction to Business Plans article so that you’re prepared when you seek your Private Money Investor Funding.

Keep in mind that the more money you’re seeking the more detailed the plan needs to be to show the need for that money.  And if you’re seeking funding for a project in the multi-millions of dollars, you can get AccessToPrivateMoney for your funding.

When you want to get Private Money Joint Venture Funding, you need to have a meeting with the private investor who wants to fund your project.  At this point in the process you are dealing with a very interested person.  The private investor has already reviewed your material and has already said that they would like to fund your project.

So why have a meeting?

Now the private investor wants to know more about you than about your project.  Exactly who are you, and why should you be the one to make your project go to completion?  If you have included substantial information about your project, the investor doesn’t need to know more about the project.

The Investor Will Verify Your Facts

Sure, the private money investor will verify your actual factual data.  But now the investor wants to know about you.  Now’s the time to tell your story and create a friendly relationship with the investor.

There was a recent article in the Business & Technology section of the Contra Costa Times by Scott Duke Harris.  The article talked about Jerry Weissman’s “Coaching the perfect pitch.”  In the article there’s a quote “No one knows how to tell a story. And no one knows they don’t know how to tell the story.”

The JV Funding Investor Meeting Is All About Story

The JV Funding meeting is ALL about story, your story.  The investor wants to know your story.  The investor wants to know who you are.  Are you trustworthy?  If the investor is going to put millions of dollars into your project, he/she wants to be sure that the he/she has a good sense of who you are.

The 8 Hour Meeting – Not All Presentation

This is why a whole day is scheduled for the investor meeting.  It’s not so much about you presenting your project in PDF of Power Point.  The investor could easily read that. Instead it’s a time for the private money investor to get to know you  – who you really are.  It’s a time to tell your story.  It’s a time to be a real person, someone who the investor can feel comfortable dealing with and have faith that you will perform what you say you want to do.

The Relationship Bond

If you can be a real person and come across as trustworthy, you’ll probably get your funding, even if your project isn’t that strong.  But if that relationship of trust is broken in the meeting, then no matter how strong your project is the private money investor will not want to give you the funding.

It’s All A Matter Of Trust

If the investor can trust you, then just a hand shake would be good enough to make the deal, and the paperwork only backs it up.  But if you lose that trust in the meeting, no amount of paperwork can bring it back.  This is what makes JV Funding different from any other kind of funding.  And this is what makes the JV Funding Meeting so important.  It’s a time to win a friend and partner for your mutual benefit.  So prepare to meet a new friend and not just a private money investor.