Financing first, then find the deal? Or other way around?

[Andy Whitcomb]

My business partner and I are gearing up to do our first buy and hold deal (or possibly BRRR depending on the deal). We have a handful of friends that would like to invest or partner with us, but since we haven't gotten the specific property picked out, we haven't been able to finalize the numbers to get them committed to the deal.

I'd like to start driving for dollars and sending letters now, so we can find great off-market properties, analyze the deal, then pitch it to our investors/partners.  However, my agent recommends that we not send out letters until we have our financing nailed down so the seller knows we are serious and that we can close quickly.  My business partner and I are both entrepreneurs, and can not prequalify for much of a loan, so we are relying on our investors or partners for financing.   

We are sort of at a stand-still because of this, so I would really appreciate any advice or insight you all may have. 

 It should be noted that we are NOT buying in a hot urban market.  We are buying cabins in a small area in the mountains to buy, fix up slightly, furnish, and rent as vacation rentals.  We have had tons of success with our 6 bedroom vacation rental in Seattle, and now ready to try it in the mountains. 

Thanks!

[Erica Muller]

If it were me, I would get all the financial end sorted out first so that you can show a proof of funds letter to the seller when you make them an offer to buy their home. I definitely have to agree with your agent on this one. If your friends are serious about investing with you, I would get all the paperwork put together, figure out how you are going to structure the business entity and open a bank account with the funds ready to go. Are they only willing to put up money if you have a deal in front of them?