What to include in presentation to potential equity partner

Question

Hello,

My name is Joseph Kelly and I’m new to real estate investing. To date, I have no real estate or rehabbing experience and I am looking to start flipping houses. I have the opportunity to present to a potential equity investor but I’m not sure what sort of data to include in the business presentation.

Currently, I do not have any specific rehab deals under evaluation due to local market circumstances. I’d like to get any information or suggestions on data I should include in the presentation in order to:

1) present the partnership in a favorable light while maintaining a balanced view of it as a whole, and

2) provide enough information in the presentation to give my potential partner a good understanding of, or “feel for,” the partnership, and/or serve as a springboard for future conversation and analysis.

An additional, related question: in what way(s) would a business presentation for a potential equity partner differ from a presentation for a hard money lender or private investor? Would there be any difference in the data provided, or in the emphasis on certain aspects of the deal/partnership?

Any information/feedback/thoughts anyone has on the above will be much appreciated, along with any random thoughts regarding securing financing for rehabs in general, or the state of the world. Please inform me if anything above isn’t specific enough to be helpful in addressing my questions.

Thanks.

Darius Ogloza · Answer

The are basically two kinds of presentations.  The first involves providing specific details about the deal you are asking the potential  partner to invest in.  This involves a lot of numbers about the deal.  Because you appear to have no deals in the pipeline, you necessarily can only make the second kind of presentation: one describing your (i) general business plan/strategy for acquiring and turning projects; (ii) market analysis; (iii) a statement of your qualifications/experience; and (iv) references.

Michelle Massaro · Answer

Hi @Joseph Kelly,

You would provide a sample Pro-Forma including all purchase costs, rehab budget, financing costs, holding costs, taxes, selling costs, expected time to complete, ARV (After Repair Value) and derive a projected profit from those figures. Always pad your expenses with a contingency, and especially pad it for inexperience. And run your numbers with the lower side of the ARV.

If you're looking for a financial partner, you'll need to think about what they are risking and what you are risking. If you don't have any cash to put into the deal, all the risk is on them and you're unlikely to find someone willing to go for it. You'll want to find someone who has experience as well as funds and expect to keep them involved from start to finish. You may want to start an LLC with the partner so they are officially and legally keeping control of their money and investment. Be willing to split the profit very favorably toward the partner until you've proven yourself and built some capital to put some of your own skin in the game.

For a presentation you would also want to provide information on what teams you have access to--do you have an agent with expertise in local neighborhood pockets, one who will sell for 1%, do you have crews, someone bringing you wholesales, etc? Give as much info as possible to a potential partner. Transparency is key.

Joseph Kelly · Answer

@Nathan G. Thank you, definitely appreciated.

Joseph Kelly · Answer

@Darius Ogloza Great info, thank you.

Joseph Kelly · Answer

@Michelle Massaro Thanks, good points, much appreciated.

Nathan Gesner · Answer

1. Who you are

2. What you've done in the past to prove yourself

3. Specifics of the deal you're attempting to raise money for

Without any experience, you'll have to really focus on #3 and explain exactly what you intend to purchase, the costs of rehab, projected timeline for renovation and sale, projected earnings, etc.

Joseph Kelly · Answer

@Nathan G. Thanks for the information. However, my question still stands: despite the fact you wouldn’t waste a dime, I still need to have a presentation that you wouldn’t waste a dime on.

Given that, what would be included in a presentation to a potential partner? It sounds like you’re saying that bank financing/loans are the only way to get financing for one’s first deals, because no one else will trust you based on your lack of experience. Understood, but what goes into the presentation itself?

Further, my presentation question can apply to all presentations: what would you include in a presentation to any potential partner, or a presentation you are creating to present to anyone or any institution from which you are attempting to gain financing?

Nathan Gesner · Answer

Why would anyone invest in you if you have no experience? No deals lined up? No numbers on paper?

I wouldn't put a dime in your pocket without you first proving our business model. In other words, you would have to show me evidence that you've successfully flipped some homes. How much you paid for them, what renovations you did, how you stayed on time and on budget, and what your end result was. Show me that you've successfully done that several times in recent history and I'll consider you. Without experience, I wouldn't waste my time.

What to include in presentation to potential equity partner

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