The Rehabber’s Guide To Angel Investors

Securing financing is perhaps the most divisive aspect of real estate investing. On the one hand, it’s the first major obstacle most investors will run into when starting out. On the other hand, it’s not as difficult to secure funding as most inexperienced real estate investors make it out to be. In fact, there’s a large contingent of lenders that are simply waiting for the right opportunity to come along, and there’s no reason your next deal couldn’t be exactly what they were looking for.

Angel investors are ready and willing to put money into a startup that they deem worthy; the only trick is convincing them that you are worthy of their capital. If you play your cards right, there’s absolutely no reason your next deal couldn’t be funded by an angel investor.

What Is Angel Investing?

Aptly dubbed, angel investors earned their title by investing in the dreams of aspiring entrepreneurs. Or, as most are quick to point out, angel investors invest in small startups or entrepreneurs that are less than established. That’s not to say angel investors can’t invest in anyone they please, but it’s more common for an angel investor to offer their support in the form of “a one-time investment to help the business propel or an ongoing injection of money to support and carry the company through its difficult early stages,” according to Investopedia. That’s an important distinction to make: angel investors are more involved in the initial stage of a company. Unlike venture capital that is typically intended to build up a company from its original foundation, angel investors help companies build the foundation itself.

Angel investors can be anyone with the intentions of helping a business get its feet off the ground; they are often well connected, wealthy individuals who believe in a product. In addition to using their own money, angel investors aren’t confined by the same restraints that come with venture capital: “they don’t go on boards, they don’t need to put in lots of capital (in fact, they usually don’t want to), they prefer dead simple terms (as they often don’t have legal support), they understand the experimental nature of the idea, and they can sometimes decide in a single meeting whether or not to invest,” according to Business Insider.

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What Is Green Angel Investing?

Green angel investing is exactly what you would think it is: an opportunity for angel investors to fund something “green” that has potential to grow into something bigger. In other words, green angel investors are more inclined to fund projects that are environmentally friendly. Therefore, it’s only natural that investors interested in “greenhabbing” a property place a priority on finding and securing funds from a green angel investor. Their natural inclination towards green projects will certainly benefit those investors who intend to incorporate sustainable, energy efficient practices in future deals.

What To Look For In An Angel Investor

Whether you are looking for angel investors or angel investing companies, it’s a good idea to establish some criteria. Prior to even looking at an angel investing website, try to build some semblance of an idea of what you are looking for. Only those investors that know what they want out of an angel investor will find what they need; it’s as simple as that. And if you are more or less unfamiliar with what to look for, the following list should be a good place to start:

• Similar Interests: It should go without saying, but it helps to find an investor with similar interests to your own. If for nothing else, angel investors are more inclined to invest in the companies they firmly believe in. Finding an angel investor whose interests align with your own will make it more likely that they will actually invest in you.
• Well Connected: Real estate has always been a people business, and it will continue to be a people business. The more connected you are, the better, and angel investors are no exception. Therefore, when looking for an angel investor, take their own network into consideration. Who do they currently work with? Who have they worked with in the past? Who do they know? There’s a good chance your angel investor’s network could turn into your own, so it pays to take note of who they are used to working with.
• Appropriate Funds: Not surprisingly, angel investors should have the funds on hand that you require. Not only that, but they should be able to get them to you when you need them, which is often immediately. You must make absolutely certain that your angel investor can do what they say they can.
• Some Level Of Real Estate Knowledge: It isn’t absolutely necessary, but it wouldn’t hurt if the angel investor you intend to work with has at least some idea of how the real estate investing industry works. That way, there will be a lot less confusion and time wasted on simple explanations. Again, it’s not necessary, but the more the angel investor knows about real estate, the smoother the transaction should be.
• Someone That’s Not Overextended: It is important to take note of how busy the angel investor is. In other words, how “involved” is their money? Are they currently funding several deals, or would you be the only one? While some angel investors are perfectly capable of funding several deals at a time, some may find it difficult. Find out which side your investor lands on before accepting their funds.

Often overlooked, and perhaps even underestimated, angel investors are not given they attention they deserve. As it turns out, angel investing is a viable alternative to traditional financing, and even private money lenders. What is angel investing, if not for a possibility to fund your next deal? At the very least, it needs to be carefully considered. More importantly, however, you’ll never know until you investigate further.

Key Takeaways

• Angel investors are ideal sources of funding for those looking to finance an impending real east deal.
• Angel investing is more geared towards funding a startup, as opposed to funding the further growth of an already established company.
• Compiling an angel investors list you can depend on will pay significant dividends.