3 Questions to Anticipate When Presenting an Apartment Building Deal

3 Questions to Anticipate When Presenting an Apartment Building Deal

1 min read
Matt Faircloth

Matt Faircloth, co-founder and president of the DeRosa Group, is a seasoned real estate investor. The DeRosa Group, based in historic Trenton, N.J., is a developer and owner of commercial and residential property with a mission to “transform lives through real estate.” DeRosa creates partnerships to finance select real estate investments and has a proven track record of providing safe, profitable investment opportunities to their clients.

Experience
Matt, along with his wife Liz, started investing in real estate in 2004 with the purchase of a duplex outside of Philadelphia with a $30,000 private loan. They founded DeRosa Group in 2005 and have since grown the company to hundreds of units in residential and commercial assets throughout the East Coast. Under Matt’s leadership, DeRosa has completed tens of millions in real estate transactions involving private capital, including fix and flips, single family home rentals, mixed-use buildings, apartment buildings, and office buildings.

Matt is an active contributor to the BiggerPockets Blog and has been featured on the BiggerPockets Podcast three times (show #88, #203, and #289). He also regularly contributes to BiggerPockets’ Facebook Live sessions and teaches free educational webinars for the BiggerPockets Community.

Matt authored the Amazon Best Seller Raising Private Capital: Building Your Real Estate Empire Using Other People’s Money. The book is a comprehensive roadmap for investors looking to inject more private capital into their real estate investing business and is a must-read for anyone looking to grow their business by using private lenders and equity investors. Kirkus, the No. 1 trade review publication for books, had this to say about Raising Private Capital: “In this impressively accessible introduction to a complex subject, Faircloth covers every aspect of private funding, presuming little knowledge on the part of the reader.”

Matt and his wife Liz live in New Hope, Penn., with their two children.

Education
Matt earned a B.S. in Industrial and Systems Engineering with a minor in Business from Virginia Tech. (Go, Hokies!)

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When starting out, I recommend that buy and hold investors look at smaller deals, as I did. It’s a good way to get your feet wet and learn the game of investing. It’s also a way to build a track record as a successful investor and landlord. You may be able to do deals of this size with your own money or with private loans via the buy-renovate-rent-refinance-repeat method (BRRRR). Once you expand into apartment buildings, you may need to raise investors to come into the deal with you.

Related: Is it a Bad Idea to Buy an Apartment Building for My Very First Deal?

3 Questions to Prepare for When Presenting an Apartment Building Deal

Most deal syndicators make the mistake of talking about the deal, money, and cash on cash returns to start selling the investment up front. I have raised money for seven deals to date and have found that investors typically have the same three questions. They may ask them in different ways, but most investors ask the same basic questions, and the first two don’t have much to do with return on investment or the deal itself.

  1. Can I trust you? This question typically gets worded differently than that, and it might sound like “what is your track record” or “can I speak to some of your past investors or references.”
  2. How will my money be protected? This is an easy question to answer on a private loan deal, but for an apartment building where the investor will get ownership of the building with you, it’s a bit more complicated. Be prepared to explain the entity structure and how they are attached to the investment through their ownership of the LLC or LP.
  3. When will I get my money back? It’s at this point that you get to start talking about the actual deal, but the focal point should be the exit strategy and return of investor capital. You can also talk about financial returns because if you did a good job on questions one and two, the investor will have enough confidence to make their final decision.

Be sure to watch the video for more detail on the topic. Once you watched, leave a comment below so we can get into a conversation.

I look forward to hearing from you!