People often say that the hardest part of property investing is finding the funds to invest, therefore I am investing in my viewers' deals! I have a series on my new YouTube channel (Undercover Millionaire) called The Property Pitch. The first episode is now out and you can watch the full video above. I would recommend watching the video until the end, as you can learn a lot about how to present your own property deals to investors.
Raising funds is an important part of property investment. In this article, I will give you 3 things that you need to consider when making your pitch.
1. Find a deal that would be hard for the investor to find themselves
The first pitch we were presented was a 2 bedroom Buy, Refurbish, Refinance (BRR) deal. The problem was that the margins were rather small and it was something we could easily find ourselves with rather little work. When an investor is going to split the profits with you, they want something that they either couldn’t find themselves or that would take them a lot of time to find.
You need to consider who you are pitching to and their level of experience to know if a deal is likely to impress. If you are pitching to a family member with some savings and no previous property experience, they may not be able to find a deal themselves that an experienced professional could find in minutes. Make sure your pitch fits your audience.
2. Know your facts about the property and the rules that apply to your plans
In the second pitch, there were too many unknowns. The pitcher didn’t know the value of the commercial unit and seemed unsure about whether the building was in a conservation area or not. He didn’t know the height of the basement. Ultimately, he didn’t have enough information on the property leading to his projected GDV being lower than the cost of buying and converting the building!
Make sure you know your facts about a property inside out. Know all the facts and figures about the property you are presenting, become the expert. Make sure you understand the regulations that will apply to whatever you plan to do to the property. Research any local rules and ensure you understand them correctly.
3. Be flexible on the deal
The final pitch was successful. The pitchers knew their stuff and put forward a good deal. Importantly, they were flexible. They agreed that they would manage the property themselves and should they wish to put management in place, they would cover the costs of doing so from their share of the profits. They also agreed to not take any profits until we were paid back our initial investment.
Particularly if you are new to property, be willing to be flexible. Make sure that the investor has every reason to take a chance on you. As you build a strong reputation, and can access even better deals, you can command more favourable terms. Until then, be flexible.