Finding partners and an investment group?

Question

I've been analyzing deals for multi-unit properties in a couple areas. I was wondering how people first convince others to invest with them?

I actually have never purchased a home, I have gotten close, but I want to know what would it take to get others on board with a deal? How did you find and openly tell others about a deal without fear of them taking it from you?

Hayden H. · Answer

Hi Kyle,

Oleg nailed it. I'm doing my first flip now and this is how I found capital.

1. Told everyone I was interested in real estate, went to 200+ open houses, meet ups, met dozens of realtors, read 3 flipping books, went into home depot and other stores just to look at prices, took down contractor names when i saw them driving and even sent out mailers.

2. Put in offers knowing I didn't have the capital. Knew my numbers for the after repair value so if the offer were accepted, I would have a good deal and could pitch it or just back out.

3. When my offer was countered, I started pitching family and friends and got my real estate agent to connect me to a contractor/investor who was interested and who I've talked to before.

4. A friend and a contractor/investor decided to go in with me and here we are. It took 1 year and 4 months from the time I was interested until my first fixer upper purchase.

I'm not sure how it will turn out but at least its happening and a learning experience if nothing else.

Kyle Calica · Answer

@Mike Taravella yeah I've been trying to find local meet ups but they don't have them as frequently as I like or the ones around me are not available. I'll probably put more effort in attending one this month and if it doesn't work out I'll reach across here and reddit to create a meetup.

Mike Taravella · Answer

Hello @Kyle Calica

I would recommend going to local meetups and finding more like minded people.

I know starting off I didn't have many friends who understood why I wanted to invest in real estate, no matter how many times I explained it to them. At the meetups you will being to meet more like-minded people and level up quickly. You might even find a partner to do larger deals and 10X your growth.

Seth Ferguson · Answer

Hi @Kyle Calica

What size of deals are you looking at?

I think the first thing is mindset. You're not convincing them or pitching. You're sharing an opportunity. Sounds cheesy, I know, but it's so true.

You'll want to have management and your financing team lined up first. When you approach potential investors, you'll be leveraging your team's experience.

Buy a few seasoned investors in your area some lunch and talk to them about the deals you're looking at. You may find a partner for your first deal that can help build your credibility for the next ones.

Jay Hinrichs · Answer

YOu kind of have to do it on your own with close friends and family.. normally to get a little experince in your experince bucket before you can convince investors to go with you.

I know when I started a foreclosure ( courthouse) flip business in 1999.. I bought the firrst half a dozen myself took them through the process and created a nice presentation with P and L's and why investors should partner with me.  And that worked.

keep in mind things have changed a ton.  in some ways its harder but with crowdfunding and investors investing blindly a lot of times. its gotten easier..

Mike Taravella · Answer

Perfect idea @Kyle Calica

Feel free to connect if you need help planning it or anything!

Kyle Calica · Answer

@Oleg Shalumov yup that's what I was thinking I'd have to do. Basically, get under myself and then find people who'd want to invest in it with me. But that means I'll have to have the capital all on my own, but then again being this new I should definitely have my bases covered before jumping into any deal and not hope to get money.

Oleg Shalumov · Answer

@Kyle Calica, if you find a good deal people will invest in it.

Search for a local meetups in your area and connect with some investors that way. You can ask them if they would be interested in investing.

Once you have a few potential investors, find a deal and put it under contract - once it is under contract reach out to the investors. If you have the deal under contract, other investors will not be able to take it from you.

Chase Louderback · Answer

Echoing what @Jay Hinrichs said, YOU really have to have the experience OR someone you recruit on your team has to have the experience to take these deals on.  Think about it from the perspective of the potential investor.  Why would they want to lend you their hard earned capital when you haven't done a deal?  That's not to demoralize you, but just something to keep in mind.  Now if you know of someone in the area you can partner with, or you have an extremely solid business plan, then that can make it much easier to find capital.

Just having one deal done to show you can do it will definitely help with finding investors for your future deals.  Maybe you could partner with someone local and help them with their flip that way you get the experience.  Another option could be to bring an experienced person on as sort of a "mentor" position and they will get a cut of the profits, but when you are asking investors about joining you on this opportunity you can use the mentor's experience as a way to make them feel more comfortable.

Now about approaching investors and preventing them from cutting you out of the deal, I believe your only option is really to have it under contract.  You can make the contract so that it is easy for you to get out in case you can't find investors.  Alternatively, you could make a vague overview of the property and plan so that they have enough information to know if they would be interested in working with you on this deal, but not enough information to snag it from you.

Feel free to DM and talk some more about it, but hopefully that helps.

Kyle Calica · Answer

@Jay Hinrichs then I need to make some friends!

I think the largest problem is I have very finicky friends. They aren't really risk takers even if I find very low-risk deals.

I need to go out and meet more friends interested in real estate.

Finding partners and an investment group?

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