Angels are real—well, angel investors, that is, and these days they are making the big bucks via small business. Angel investors are individuals with capital available to put towards the venture of their choice- typically small business start-ups, inventions, and increasingly for real estate purchases.
Typically, angels look for investments that will return about 20% each year, or ten times within 5 years. Initial investments can be anywhere from $1,000 to $10,000. There is a lot of risk involved at this level though, so careful selection of your endeavors is crucial if you’re looking to get into this field.
A trend that is growing hand-in-hand with angel investment is crowdfunding, a method of raising money for a specific “cause” online. Common causes for crowdfunding are business startups, medical treatments, environmental sustainability projects, and now purchasing real estate, too. Some websites even specifically cater to linking Angels with causes they will take a heartfelt interest in.
If being a real estate angel sounds like a good method of investment for you, where do you begin? Start by joining an esteemed crowdfunding service, or making yourself available in your local area. Then, as you sift through potential investments, use these guidelines to help make the best choice for your money and your heart:
Location & Property Type
It’s impossible to get away from “Location, location, location” when it comes to real estate. Your investments should either be within your local community, or in places where the real estate market is fruitful. Things to consider are the local economy, whether the property is residential or commercial, the ratings of nearby schools, and rental history if that is the intended use of the property.
Worth Your While?
The property you help invest in must be comfortably within your budget, however it must also provide a big enough return to make your efforts worthwhile. Decide what that figure is for you at the top and bottom, and only meet with proposals that fit into that range.
The Competitive Edge
The best investments will be with proposals that have unique advantages and thereby the potential to provide greater returns. Think of choosing someone with connections in the construction industry as they will receive faster service and better rates than the average Joe. Also, someone with a history of managing rental properties has the advantage of experience in the field and is likely to be more successful than someone just starting out.
Last but certainly not least important is how organized the proposal is. Look for someone you can feel confident investing in. They must be well-organized, present a solid business plan, demonstrate responsibility, and impress the heck out of you. If you follow all of these guidelines, you are sure to choose a solid investment that will provide effortless returns.