Some new investors in real estate start off with only a small amount of their own capital, also we all only have so much credit in the eyes of the banks/credit unions. This invariably leads to the need to meet other investors to build relationships which will (hopefully) lead to joint venture partnerships. The most important thing that the investor on the other side of the table wants to know from you the new/seasoned investor is: “What will be the benefit for me if I work with you?”. Now, this can be a difficult thing to nail down in the beginning of your investing career, what do they want to really know – should you amp up the safety of real estate? Really beat the drum of the strategy you intend to use? What if this investor does these types of deals on their own – why would the need you? There are a lot of these types of questions that I have heard many times over the years (and asked a few of them myself) but today I would really like to zero in on what the most critical points are to get across to those investors with the cash/credit you need for your deals. Essentially, at the end of the day most successful investors or successful people with money that you are coveting are primarily concerned about (and will understand this point the best) are the numbers! They want to know what is my ROI or return on investment, how much money/credit do you need and for how long?. If what you are doing supports the numbers you are presenting then the rest is really just a matter of details for the investors that you will be talking to. The second most important thing they will want to know is what is the risk/how you will be mitigating the risk- this is a common place where you will have to do some education on why/how real estate is the best investment vehicle to build wealth, because a lot of people read the newspaper and watch the news on TV and are often swayed by the media’s interpretation of “the market” now I put in that in quotes to illustrate the fact that what the market is actually doing based on the fundamentals and what the news says about it are as different as night and day. It would also be wise to show your investor the best, worst, and typical case scenario on how the deal could play out, this gives them the confidence that you have considered the possibility that not everything will always go perfectly according to plan and that you are ready for possible changes in the market which are out of your control. Finally, the investors will want to know about how the project will go/the strategy you intend to use and why it will make the profits expected that you illustrated so well in your numbers section of your presentation. The real benefit to the investor/partner is the ability to make higher than average returns on their money and have control of their investment unlike stocks/mutual funds. Have all your ducks in a row, focus on what is in it for the investor sitting across the table, know your risk and how to present them being mitigated as best as possible and you will start getting more partners on board with your ideas/projects faster!
To your success!
Tim R
