What would you put into an investor presentation?

[Michael K.]

One of my goals is to purchase a commercial level apartment building (50+ units) in the next 12 months. However, to pull this off, investor participation is a must.

Even though I understand the concept of a general business plan, I don't know what (or how) to present my idea and the potential building to investors. While I do have three investment properties of my own (two duplexes and a single family) plus manage the leasing and maintenance of 80 of my cousins' properties, this will be my first investment property of this size.

What's the best way to go about this? What do you want to see when somebody comes to you to pitch a commercial apartment building investment opportunity?

Thanks,

Mike

[Vikram C.]

I am actually looking for investment opportunities right now and here's what I would like to see. It is pretty similar to what Jon said, but maybe slightly different.

1. If you are going to have a significant stake in the property, then I would care about your qualities as a co-investor. I would like to see if you have done similar deals in the past, whether you bring any skills to the table other than just identifying the property, whether investors you have dealt with in the past have generally had a good experience in their dealings with you after they had invested, etc.

2. I would also, obviously, look at the data on the property. Rents, NOI, price, terms, condition of the property, deferred maintenance, etc, etc.

3. I would want the property to be in a growing area as opposed to a place that is dying. No offense, but between, say, Cleveland and Dallas, I am going to prefer Dallas.

4. One concern that I would have as an investor is that apartment buildings are not that hard to find on my own. So if you were to bring me an opportunity, for you to earn your share of the property the purchase price will either have to be exceptionally good or you will have a miniscule share of the ownership. I would in fact prefer to simply pay you a commission and own the thing outright. Of course, if you were also bringing your own capital to the table, then it would be different.

5. I am not into high crime neighborhoods, etc. I am sure there is good money in those places, but I would not be interested. For a given return on investment, I would always prefer a nicer quality of tenant.

6. The property has to be somewhat mismanaged for me to buy it. I am not just interested in the yield on my cash but also in appreciation. If the property offers me the ability to significantly improve its cash flows either by increasing revenues or cutting down costs, then I can add significant value to it.

7. Transparency. In order for me to do business with someone, I would want transparency from both parties. Neither one of us should conceal pertinent information from the other. I guess Jon said it best - I would need to trust you and you would need to trust me.