The semi-final of The Eviction 2022 aired on my YouTube channel recently. The contestants are playing to win £20,000 cash to kickstart their property journey! There will be an episode weekly until the end of the year. This week, the teams were doing joint ventures and rasing finance. This episode was a very important one because it narrowed it down to the final two. Next episode, we reveal the winner!
Raising finance is one of the biggest parts of running a property business. It isn’t possible to grow as big or as fast using your own money. You need to be able to bring in investors and present your deals effectively. If you are able to bring in finance, you can build a huge business without having to be a multimillionaire from the start. In this article, I will give you three tips about securing joint ventures and rasing finance.
1. Know what you are offering
Many people that are new to the world of raising finance will only have an idea of what the deal itself looks like and not what they are offering to investors. What percent of the deal are you going to give away? How much can the investor expect back upon refinancing and what happens if the property fails to meet the expected valuation? On the other hand, you may be asking for a loan. In that case, what security can you provide? Can you provide a first charge on the property? Can you secure the debt against other property you own?
It is very important to know exactly what you are, and what you are not, offering to investors. Be willing to compromise but don’t accept a deal that doesn’t make sense for you. Make sure you and your investor are on the same page.
2. Back up your numbers
You may think you know your numbers, but can you back them up with evidence? An investor will want to know that you are confident about the figures you show them. They won’t be willing to simply take your word for it; they will need to see some proof.
Don’t just get one builder’s quote, get a few. Don’t rely on the opinion of one estate agent, shop around. When you look at comparables, make sure they are actually like-for-like. Be conservative in your expectations and have multiple exit strategies.
3. The deal isn’t done until the money is in your hand
Many new property entrepreneurs get fixated on a single investor. The investor may sound very interested; they may say they are willing to sign on the dotted line; and they may even sound excited about the deal. However, this doesn’t mean the deal is done. You should still be calling other investors and trying to sell the deal. Keep doing this until contracts are signed.
Even when contracts are signed, until the money is in the bank, the deal isn’t fully done. Make sure you have specific deadlines for everything. You should also be willing to move on if things don’t work out for whatever reason.