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Where to find angel investors for 120% to 150% real estate, at the same time as helping a permie?

 
Posts: 58
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Hello folks!

I hope i'm posting in the right place - if this is the wrong place, please do help lead me to the correct one! I am hoping against hope to find out how Angel Investors can be contacted. I believe i have an opportunity to make an investor 20% to 50% return on their investment within 1 to 3 years.

I have been looking for a property for about six years in our area, but this last year instead of looking in my own budget i decided it might not hurt to look in a larger budget. I have found the property of my permaculture dreams. I believe i could really make a difference for the food sustainability of my county, if i only had a property big enough for my experiments. I currently have a small farm and run two profitable businesses on them, but they are too small for what i need to do. The problem is, this parcel i want is not being sold separately.

The property is in the US, it's over 300 acres made up of 10 parcels, already legally divided up for selling separately. The owner wants to sell because her husband has died, and she wants to move on and get a small condo. I have been trying to find individuals to buy the other nine parts, and have found people for three of the other parts. The property is expected to cost around $8 million dollars. They are selling the whole for at least $2 million below the cost of selling them separate. When i asked them why they wouldn't sell them separately themselves, she and her son (who handles her finances) told me that she is 82 and just doesn't want to wait around, and they don't really need the money or more projects to handle. They seem like good folks who just want to simplify.

I have of course done a lot of research on the subject and have a lot of data to share. They are putting the property to auction on May 21st, and the auction has a 30-day cash policy. That is not a lot of time, but perhaps just enough time for the research needed by an investor. I have been part of software projects which had angel funding, but i was never in the financial department. I don't know the first step of how to find this level of funding, but it seems beneficial to whoever would do it. If you know where Angels are found, please let me know.

I'm putting my all into this project, because if it even has a 10% chance, that might be the only chance i have. The elevation of this parcel is unusual in our area- most parcels at this altitude are state land in the conservation district, where even planting a tree would need special permits and studies. (This parcel was private property since before those districts were in place.) At this elevation i could grow crops which are almost entirely imported in this area. I could be the only farmer at the market with these cooler weather crops! Additionally its bordered by state forest land, and it's woodland on a slope, and big enough for rotational grazing. It even has mature trees of the type i already use for my business. Because of my existing businesses, if i can transfer the activity to the property, i can apply for farm worker housing, and i hope to permit a campground on the parcel for future permaculture studies. In this area, how many dwelling-permits a parcel has permitted is the main limiting factor on land prices, so larger parcels with one house right sell for less than a tenth of the price per acre of a smaller parcel with one house right- but the large parcels rarely come on the market. Buying large and splitting means the difference between being able to go for my big permaculture dreams- or not.
 
pollinator
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My experience with angel investors is limited to the tech industry, but I'd guess that there's more similarities than differences.  I suggest looking for help locally to find an investor.  If you target local real estate investors, you can see who they recommend and what they think you'll need to have/do in order to get financing.  Even the small fish in the RE investment scene can have great advice and, more importantly, may have contacts that can get you in touch with people who invest that kind of money.

I think you'll need to have the financial details ironed out to show them how they'll get their money back, but don't be afraid to show the more esoteric benefits; many angel investors are looking to give back in some way as well as make a profit.  In my limited experience, most of these guys won't get out of bed for 20%, but you never know.

Best of luck with this.  Please let us know how it goes, good and bad.  Anyone looking for financing can learn from your experiences.
 
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Have you link to the broker selling it? It would be nice with pictures and facts.
 
pollinator
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You have summarised the potential upsides, but angel investors will be very very interested in the possible risks and downsides. What if the plots don't sell? What if they sell for less than you expect? What if there is a hidden problem on one or more plot (old mines, waste dumps etc...)? Your proposal looks a lot less interesting when you start asking these questions, but especially if you don't pre-emptively have answers to them all!
 
Kay Gelfling
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Thank you for the replies!

I do have a title report, maps of the property, and quite a few pages of details to share with potential investors. All this data, along with drone videos and images of the property available for folks who might be interested in investing. I'll summarize below.

Due to the limited time frame and large budget, i do not think that crowd funding or mortgage-based lending will work for my situation. In 2018 did go through a bank and was able to obtain a business loan to move to a larger business property in my area, but we closed "quickly" in just under 90 days. And that was with nearly 40% down, which is not the situation for this parcel. I would need to sell my home in order to buy just one of the ten parcels. Despite that, I will try to find and contact local real estate investors, as it is the only lead i have at the moment, as you said, perhaps they will know somebody who knows how to approach my situation. It's a good idea to try!

The biggest risk for investors seems to be the real estate market, as some of you have mentioned- my calculations are based on the market holding steady in the 1 to 3 year time span, and if it were to fall then it is my understanding that undeveloped land is the hardest to sell, and last time the market fell it was my experience that bare land was the longest to recover. The second biggest risk is the water. Except for one parcel these properties are undeveloped. There is a well on the property for the large fancy house that exists on one of the parcels, and hook ups for at least six of the other parcels are owed to us by the county, however the county may delay, which might mean that we have to create a new well for some of the parcels. We have estimates for wells based on ones already in the area. We could sell the parcels without the water but they will not be as attractive to buyers. As far as old mines, in this county the real estate disclosure laws are strict- you are even legally required to report if a property has been known to be haunted! Boo! Since we have the title report, so the risk of those kinds of surprises on the property is lower than in some counties. Still, if the investor has worries we could do some testing or further research if we start soon.

I would want to be flexible in my plan based on the preferences of the investor, but i imagine that we could create a small holding company for the purposes of buying and selling the property, and i would not own the company but instead manage it. (I would of course want to talk to a CPA about the best way to structure the purchase and sale of parcels to minimize tax exposure during the sales.) If the investor liked this plan, I think it would make sense for me to arrange the purchase of the property on behalf of the company, sell the parcels on behalf of the company- keeping back any monies required for taxes or fees, handling all the paperwork and showings, bringing the return to the investor, and then when all the other parcels are sold (or the investor has otherwise maxed out their return), the company could sell the last parcel to me. We have bids from local developers to put in the required county infrastructure to build on the parcels, and one experienced developer has stated that they would take one parcel in trade for all infrastructure. The strategy depends if the investor would want to have a smaller gain sooner or if they feel they would have a larger gain later. Instead of attempting to sell all parcels as soon as possible, we could sell two or three parcels in the first 90 days or so if my current buyers are appropriate, then wait (a year?) for the infrastructure to be completed, and the parcels would likely sell for more if the market has not reduced. If they wanted to attempt an even higher return (again, assuming a steady real estate market) some of the parcels could be fully developed into lots with houses. (If that was their preference i think i would want to be able to buy my intended parcel after they had a full return on their initial investment rather than at the point of selling all other parcels, because such development could take additional time to complete. This is perhaps over-thinking the situation.) But again i would want to structure the situation to the needs of the angel investor, so this plan is just intended as a starting point.
 
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