I recently posted an addition of The Property Pitch on my YouTube channel. The Property Pitch is a show I host where people present me their deals and, if they stack up, I invest. I mostly post the episodes on my other channel Undercover Millionaire, but this bonus episode is on my main channel. You can watch the full video (above) and I highly recommend watching until the end as it contains a surprise announcement you will not want to miss!
The Property Pitch is all about how to pitch to investors, and my last two articles about it have given tips on doing exactly that. You can find The Property Pitch – Episode 1 article here and you can find The Property Pitch – Episode 2 article here. In this article, I am going to do something a bit different. Here, I am going to give 3 tips to new investors looking to joint venture with property entrepreneurs.
1. Protect your investment
No matter how good an investment looks on paper, or how extensive the track record of your business partner is, things can always go wrong. There are no sure things and there are no investments without some element of risk. The thing you need to do is manage that risk. Take a look at the best case, likely case and worst case outcomes. Make sure you take a realistic approach to each, neither inflating the best case nor exaggerating the worst case.
Make sure that the investment has multiple exits. If you can’t re-finance, could you profitably sell the property, for example? Make sure your money is protected. Can you get a charge on the property? Is it a first or second charge? Make sure to seek professional and legal advice before handing over any cash.
2. Investing with a new property entrepreneur vs someone with experience
While investing with someone with a proven track record is often a safer option, there are also reasons to take a chance on a newer face. Someone that is newer to property has more to prove and can direct 100% of their energy towards you and your deal. You will be the priority rather than the afterthought and will likely have more say in what is going on. You can also negotiate much more favourable terms given that you are taking on greater risk.
When investing with people who are new to property, make sure that they have been trained by a reputable property training firm. Also make sure to do additional due diligence and checks before investing.
3. Value what you bring to the table, aside from the cash
As an investor, you can negotiate a better deal for yourself if you bring more than money to the table. Does your professional background mean you will bring invaluable skills in advising on the deal? Have you had advanced property training? Can you bring in suppliers of parts or labour for under the going rate?
Consider what you bring to the deal and negotiate accordingly. If currently you only bring cash, consider ways to change that. The more you bring, the better deal you will get for yourself! If you want a hand getting started in property, why not book on to our next crash course? Tickets are just £1 and you can get yours here.