When obtaining financing to start your next construction project one day you might find that your bank is suddenly a little cool to your proposal. Maybe you want to build five new duplexes in an area with promise but the bank is not convinced. Or maybe they are convinced it’s just they’re not in thepresenting your proposal mood to extend any loans unless they fit neatly in their little box.

Not to worry. In fact, many successful real estate investors stay away from banks and concentrate on an internal group of private individuals who pool their funds together for a particular project. If you think that’s your direction, how do you solicit funds from individuals and how and when do you pay them back?

Investors today who are watching their meager returns on Wall Street or pour their idle cash into extremely low-yielding bonds and Treasury notes are prospects for solid returns. If they invest in real estate their funds are in a hard asset with a marketable value. To get the attention of an investor’s ear, try offering a return far greater than anything currently on the market without a gamble.

But you must first put together a plausible plan with a solid exit strategy. Is there a market for those five duplexes and if so can you prove it? Get together with your real estate agent and point out the current rental demand for the area and how soon you can take advantage of it.

Evaluate all costs involved including permits and legal fees in addition to the costs to build. Are you going to sell the duplexes to other investors, keep them all or divide them up? However you intend to dispose of the real estate, have a clear plan that is easy to understand and not clouded with rosy projections.

Have your attorney draw up your legal agreements and notes for your various investors clearly spelling out how much interest will be paid and when. It boils down to nothing more than a solid business plan. If an investor can clearly see the outcome, you’re well on your way.