Bonus & Wendy's Monday Evening Private Investment Thread . . . .

[Bonus]

We're getting some encoraging feedback from people who are following us, regarding Private Investment, as well as some advice on things to look out for. All good stuff.

 

This week I've also had a couple of emails from the "Angel Investment Network" but they are more Sales based - encouraging us to pay for a "fuller service" from them . . . .  

[Bonus]

Our first little excursion into looking for a potential Private Investor on-line has now come to an end and although we haven't found an investor, we have learned a few useful things going through the process.

 

We tried out with the Angel Investment Network which advertised "Free Registration" and "access to 225,987 potential investors". I filled in all the sections of the online application form, giving details of our project, our business plan, our viability study and ourselves etc etc and at the end of several hours of work, was ready to "Publish our Pitch". Once you publish the pitch it has to be approved by the AIN before being given a Live status.

 

On clicking the "Publish" button, you are taken to a page that offers you various Paid options that enable you to enhance your pitch. Prices for the additional options range from $150 to $2500. Since this is our first attempt and we're really just finding our way here, I didn't choose to enhance our pitch. I clicked "continue" and was taken to a second Paid options page which informed me that the free option, which I was currently signed up for, did have certain limitations on it...

 

Several important sections of our pitch would be blanked out and therefore not available for potential investors to see, our acompanying pictures/photos would not be included with the pitch, the pitch would only be sent to a fraction of the available potential investors and our pitch would be sent out as an "Anonymous Pitch" - meaning investors would have to open it and read it to see what it was about, rather than being told in advance for example that it was a property development. 

 

I understand that everyone is tyring to make money here and that you don't get anything for nothing, so I won't run the company down for their "bait and switch" methods, and I kept a "copy & paste" copy of all the text I filled in - so I won't have to type everything out "longhand" again the next time we go through this process.

 

I say our "first little excursion has now come to an end" because one of the other limitations to the Novice Package is that the Pitch is archived after 30 days and if you want to republish it, you have to pay to do so.

 

I doubt that this exercise will result in us hearing from a potential investor, the limitations the company place on the free option are just too crippling. Of course its designed like that - again, I understand.

 

It's a shame because I'd happily have paid the company a finders fee if we'd been successful.

 

Anyway, onwards and upwards. I believe we have a good idea and we've bought ourselves a great property and I'm nothing if not optimistic!  

Edited December 9, 2019 by Bonus

[Bonus]

Over the last couple of weeks we've been contacted by a couple of people who want to take a look at our  business plan - which is a nice step in the right direction for us!

 

I've updated it, double and triple checked it to make sure that a) it makes sense when you read it, and b) the numbers add up.

 

It's easy when preparing a document like this, because you yourself know the Project and our Story inside out, to take certain things for granted and assume that everyone knows what you're talking about. So proof-reading it is crucial. I'm sure that the finished document is good.

 

Almost time for Christmas now. We didn't win the Spanish National Lottery - it was always going to be a long shot because we didn't buy a ticket - so we're going to push on with making our own way through this......

 

:-)

[Bonus]

We popped in and spoke to one of the banks before we left Spain on our 10 day trip to the UK.

 

They confirmed what I'd pretty much already guessed - if we can get our business built using private investment, run it succesfully for between 18 months and 2 years and produce a set of accounts showing that everything is going ok - then in principal they should not have a problem re-financing us if we wanted (or needed) to pay back our investors.    

 

:-)

Edited January 5, 2020 by Bonus

[patham]

We popped in and spoke to one of the banks before we left Spain on our 10 day trip to the UK.

 

They confirmed what I'd pretty much already guessed - if we can find get our business built using private investment, run it succesfully for between 18 months and 2 years and produce a set of accounts showing that everything is going ok - then in principal they should not have a problem re-financing us if we wanted (or needed) to pay back our investors.    

 

:-)

 

Just like most banks - if you can prove that you don't need their money they are more than happy to lend it to you as they feel that why should other people be making money off you if they can.

[Bonus]

Just like most banks - if you can prove that you don't need their money they are more than happy to lend it to you as they feel that why should other people be making money off you if they can.

 

Exactly. 

[Bonus]

Just like most banks - if you can prove that you don't need their money they are more than happy to lend it to you as they feel that why should other people be making money off you if they can.

 

 

Exactly. 

 

In fact, for that very reason, going to the banks to replace an initial "private investment" loan with a more traditional bankers business loan would not be something we would be in a hurry to do unless we had to.

 

If we can find an initial investor(s) who is happy with onging "capital+interest" monthly repayments and does not need their capital lump-sum back in a hurry, we would treat the investment like a medium-term bank loan and keep it going for as long as the investor is happy to do so.

 

Equally, if we find an initial investor who then wants/needs their capital investment back after say 2 years, we would look at re-financing the project with a second private investor to repay the balance of the original investment (which would have decreased thanks to the monthly repayments made in the meantime). In theory, provided we can keep finding private investors, we could do this as many times as necessary to avoid going to the banks - and each time, the amount needed to pay off one investor with another would decrease as the loan capital slowly gets paid off.

 

Lot's of options . . . . 

Edited January 7, 2020 by Bonus

[Ozzie NL]

In fact, for that very reason, going to the banks to replace an initial "private investment" loan with a more traditional bankers business loan would not be something we would be in a hurry to do unless we had to.

 

If we can find an initial investor(s) who is happy with onging "capital+interest" monthly repayments and does not need their capital lump-sum back in a hurry, we would treat the investment like a medium-term bank loan and keep it going for as long as the investor is happy to do so.

 

Equally, if we find an initial investor who then wants/needs their capital investment back after say 2 years, we would look at re-financing the project with a second private investor to repay the balance of the original investment (which would have decreased thanks to the monthly repayments made in the meantime). In theory, provided we can keep finding private investors, we could do this as many times as necessary to avoid going to the banks - and each time, the amount needed to pay off one investor with another would decrease as the loan capital slowly gets paid off.

 

Lot's of options . . . . 

Plus with each new round of investment (to replace the previous) there should be less risk involved so the price (ie interest charged) should be lower.

The one caveat is that the underlying assumption is that things keep getting better. If you hit a serious bump in the road, you might be scrambling for funds and end up having to accept a deal which is more taxing than the previous or worse, find the investor decides to take over the property (all depends on how finance agreement is written but it is common for there to be a clause allowing investor to take ownership should you fall foul of payment arrangements).

 

Been following your adventure here with interest and wish you all the best

[Bonus]

Plus with each new round of investment (to replace the previous) there should be less risk involved so the price (ie interest charged) should be lower.

The one caveat is that the underlying assumption is that things keep getting better. If you hit a serious bump in the road, you might be scrambling for funds and end up having to accept a deal which is more taxing than the previous or worse, find the investor decides to take over the property (all depends on how finance agreement is written but it is common for there to be a clause allowing investor to take ownership should you fall foul of payment arrangements).

 

Been following your adventure here with interest and wish you all the best

 

Correct. With each potential re-investment, the lump-sum required will be less, the business will have a longer "provable" working history and therefore the overall risk should be less.

 

I don't think things necessarily have to keep getting better though. As long as they tick along at a level that covers the bills plus a bit, then the outstanding loan comes down slowly and, with time, our position gets stronger just by "standing still" (so to speak). 

 

The last thing we would want, as you mentioned above, is to get ourselves into a position where we have to borrow expensive money to pay back cheaper money. We've been exceedingly careful with everything we've done so far and we will continue to be so.

 

Selling a kidney or asking the russian mafia for a loan are not on our "to do" lists yet!

[Bonus]

Heard a bit of a horror story recently . . . .

 

This week I've been guiding a really nice guy called Nehme. Nehme was born in the Lebanon and has  recently moved back there after living and working in Canada for many years. He's done quite well for himself working as a software engineer for companies like Microsoft & Google. Now he works for a US comany remotely, whilst living in the Lebanon.

 

We've had some great rides (I've posted pics on my "Pyrenees" thread) and of course we got to talking about how I got here from SA, and what my future plans are. I ended up sending him a copy of our latest Business Plan which he liked and made some interesting observations on.

 

We got to talking generally about banks, investments, "risk" etc and he told me about his brother who has around 400 000€ sitting in banks in the Lebanon that he can't get out. After years and years of warnings that "one day things are going to go really bad" there, it has finally happened. People in the Lebanon are currently restricted to withdrawing 300€ per month from the bank, regardless of how much more than that they may have.

 

Nehme still has his capital invested in Canada, so he's ok for the moment, but there are going to be tax implications for him now that he has officially left the country- so he will be looking to move his money somewhere else soon. Just not to the Lebanon!

 

 

https://www.reuters.com/article/us-lebanon-economy/lebanons-crisis-needs-20-billion-25-billion-bailout-former-minister-says-idUSKBN1Z21IR

[coppi]

Heard a bit of a horror story recently . . . .

 

We got to talking generally about banks, investments, "risk" etc and he told me about his brother who has around 400 000€ sitting in banks in the Lebanon that he can't get out. After years and years of warnings that "one day things are going to go really bad" there, it has finally happened.

 

 

 

https://www.reuters.com/article/us-lebanon-economy/lebanons-crisis-needs-20-billion-25-billion-bailout-former-minister-says-idUSKBN1Z21IR

That is why I have been legally taking money out the country for over 20 years........it is expensive but do not want to get caught in that trap here one day, this is Africa afterall!

[Bonus]

That is why I have been legally taking money out the country for over 20 years........it is expensive but do not want to get caught in that trap here one day, this is Africa afterall!

 

I'm sure the expence, especially if you're not convinced it's necessary, is a big factor in putting people off. 

 

We all get used to what's going on around us and we can (speaking for myself anyway) be very lazy when it comes to changing something that seems to be "working ok most of the time".

 

The Lebanon and especially it's capital Beirut, have been on the News on and off since I was a little boy - and it's not generally good stuff. But as Nehme said, people, including his brother, were used to it and the longer things kept creaking along the more people thought they'd never change. Now he's finding out differently. 

Edited January 19, 2020 by Bonus

[Bonus]

Before Christmas I asked the Department of Commerce, who carried out our original Viability Study, to give us an updated version using some new figures that I had for them. Our circumstances have changed a little since the original study was carried out and I wanted to confirm that everything was still in order.

 

I'm happy to say that all is good and our business plan still holds water. The revised Viability Study shows that our business will be able to wash its own face.

Edited January 26, 2020 by Bonus

[Bonus]

One of the people we're talking to re Private Investment asked us if we could provide some sort of proof of the value of the property we own, since that is going to be the security against anything we borrow.

 

I asked our Architect, who also owns the local estate agent that we bought the Barn through, and he's come back to us with an official valuation document.

 

I'm happy to say that the current value of the property equals What we paid for it + the cost of the Architects Project + the cost of the Council Planning Permission + a bit of normal growth in the time since we bought it.

 

This was good to hear.

 

Since any and all the money we borrow will go directly into the repair and refurbishment of the Barn, the value of the Barn will increase directly in line with whatever we spend on it until, at the end of the project, the finished property will be worth more than all of the costs involved in buying and renovating it. "The whole is greater than the sum of its parts"..... 

 

So whatever loan we manage to find will always be secure. 

 

As a bonus, because there is so little property for sale in this area (and none at all in Guaso village) once the property is finished, if for any reason it didn't make money as a "B&B" we could sell it for enough to get everything we put into it back again, clear any loans or debts and still make a bit extra for ourselves.

 

Win Win!

[patham]

 

Since any and all the money we borrow will go directly into the repair and refurbishment of the Barn, the value of the Barn will increase directly in line with whatever we spend on it until, at the end of the project, the finished property will be worth more than all of the costs involved in buying and renovating it. "The whole is greater than the sum of its parts"..... 

 

 

I don't want to be a Debbie Downer, but there is always a risk of over-capitalisation, where the money invested is not perceived by the market to be of good value, and as such will not be recognised by potential buyers. 

 

For example, friends were looking into extending their house, new bedroom and en-suite, the building costs (expensive Australian labour) were priced far in excess (i.e. multiples) of the improvement in market value. As they do not see it as their "forever" house, they shelved the idea, obviously if you plan to live in it (or use it as a business) for 20 years a different set of drivers and economics comes into play.

 

I'm not saying it will be the case in your endeavour, but I suppose I just wanted to put in my Z$2 worth that developing property is not always a guaranteed thing. Moral of the story, those solid gold toilet bowl sets you were thinking of getting probably isn't a good idea for resale value.

 

PS.I still wish all the best for your plans though !

Edited February 1, 2020 by patham

[CAAD4]

Heard a bit of a horror story recently . . . .

 

This week I've been guiding a really nice guy called Nehme. Nehme was born in the Lebanon and has recently moved back there after living and working in Canada for many years. He's done quite well for himself working as a software engineer for companies like Microsoft & Google. Now he works for a US comany remotely, whilst living in the Lebanon.

 

We've had some great rides (I've posted pics on my "Pyrenees" thread) and of course we got to talking about how I got here from SA, and what my future plans are. I ended up sending him a copy of our latest Business Plan which he liked and made some interesting observations on.

 

We got to talking generally about banks, investments, "risk" etc and he told me about his brother who has around 400 000€ sitting in banks in the Lebanon that he can't get out. After years and years of warnings that "one day things are going to go really bad" there, it has finally happened. People in the Lebanon are currently restricted to withdrawing 300€ per month from the bank, regardless of how much more than that they may have.

 

Nehme still has his capital invested in Canada, so he's ok for the moment, but there are going to be tax implications for him now that he has officially left the country- so he will be looking to move his money somewhere else soon. Just not to the Lebanon!

 

 

https://www.reuters.com/article/us-lebanon-economy/lebanons-crisis-needs-20-billion-25-billion-bailout-former-minister-says-idUSKBN1Z21IR

I like the way you call it "the" Lebanon. My guess is that you're a Human League fan?