Investment Articles

Investing money to make it grow is not as difficult as people think. Once you learn some basic tips and assess what money investment option you have, then it will be as easy as 1-2-3.

Investment means committing money for long term benefits. Some people use it as means of combating inflation. People invest for different reasons such as house purchasing, retirement or for the future of their children. If you are undecided about your options, here are some useful tips.

First step is to get to know different investment options such as stock market or mutual funds. By investing in mutual funds, your money is safer than the stock market. There are bonds, stocks and money markets in which you can diversify the money in. But if you want to get the maximum results, then you may opt for purchasing shares in the stock market.

If you have decided to invest in stocks, be patient before expecting to see results. Profits will come later once the stocks are sold; however you should hold off selling them for as long as possible when the market is down. Remember to buy stocks at cheap rates and over a period of time, their rates will go up and you will be able to sell for higher returns.

Other less risky options are fixed deposits, although they do not generate as much profit. It depends on the amount of income you expect from your investment. Whether you are a beginner investor or an experienced one, there are always the three golden rules to follow to get the highest possible returns, invest your money early, regularly and on a long term basis. Sometimes long term investing may not be a suitable option if you need money to pay for university fees, so set your financial goals realistically and choose an appropriate money investment option.

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Today’s topic is a bit more 201 then 101 for subject matter, but good nonetheless for real estate investors of any experience level. You see, there are two basic types of private money investments: deal specific and what I call time period specific. And each has its own thorns to avoid. Some private money you bring in will be tied to a specific deal. You raise money to flip a house, the house sells, and it’s time to pay the investor back. Other deals involve money being invested for a set period of time (whether loans or equity investments). The return is paid on a monthly, quarterly or annual basis.

A lot of times, when you first get started raising money, you’ll tend to go the ‘deal specific’ route. You may find it easier to have someone commit funds for the time period of a deal, which could be a few weeks to a few months or possible (such as with an apartment building) a few years. It’s important to build the investors expectation the right way from the beginning. You should avoid investors who want to place funds with you as some sort of a high yield holding tank for their money. I’ve seen it happen before (it’s happened to me) where a potential investor wants to place funds for 3 or 6 months but then has an immediate home for that money after their investment with you cashes out. This is what I call “temporary” private money and it can really put you in a tough situation. It does beat hard money or not doing the deal at all, so keep than in mind – but they type of investor who cannot place funds for more than a few months isn’t one you can work with long term. So…back to our main question, which was: when is the best time to roll private investors back into the fold? What I mean is – as an investment is about to cash out or the time period for an investment is about to expire, how can you work to get the investor to roll their money back in?

First, you have to be proactive. Find a home for the money before it comes time to start talking to the investor about what they want to do with it. A lot of your private money investors will want to “keep a good thing going” and just roll the money back in. I suggest beginning discussions with investors at least 4-5 months before their investment matures. For deal specific investments, it helps to broach the subject at the beginning of the first deal. Make sure they are open to future investments if they are happy with this deal.

One big thing you have to pick up from all of this is what I call THE PROPER CARE AND FEEDING OF INVESTORS. I’m borrowing this from a Dr. Laura book my wife has, but it applies to private money investors. You have to make doing business with you an absolute joy the whole way through. You can get a lot of money re-invested and also get a lot of referrals to other investors this way too. Don’t automatically expect your investors to just roll their money back in. Actively work for it the entire time it’s invested. It sure beats going back to the well again (especially when you don’t have to).

Why not go back to the well for MORE money instead of just replacing existing funds?

Adam Davis is a real estate investor, author and speaker. He teaches real estate investors how to raise capital. Adam has completed hundreds of deals- from single family house flips to apartment buildings. He has raised millions of dollars from private individuals. For a FREE audio program on how to get private money go to: http://www.UltimatePrivateMoney.com.