How do I approach a more experienced investor with a deal?

Question

Hello All

I'm a new investor and haven't done my first deal yet. I'd like to find a deal and then ask a more experienced investor if they'd like to be  partners on it. I envision suggesting a 20-80 split of the profits (I'll get the 20%) and I'll get to go "shadow them" as we go through the process of closing the deal.

When I've found a good deal, what is the best way to approach another investor? Should I have paperwork already prepared? Does it make sense to post about it in the forum?

Thanks in advance for your time.

Danielle Davenport · Answer

Hello all, I have hosted a few meetups for like minded investors. If you are interested, connect and I will organize a few more based on Bay Area. I'm not just a realtor - I am an experienced investor ... so don't worry not trying to make a buck - just need to brainstorm on Syndications, Opportunities, etc...

Bobby Nilsen · Answer

@Bryan Odom You just did it. Would love to chat with you about real estate. Have done quite a few deals in the Bay Area. Please reach out and we can chat about getting a deal done.

Bryan Odom · Answer

Thank you, Jacob, for such a thorough response. It all makes sense. If I've done my homework, it should address many of the questions another investor would have.

In terms of the 20/80 split, I'm just thinking about what would make the partnership as enticing as possible. I don't mind foregoing money if I'm gaining a lot in terms of knowledge and experience.

Finding a less-explore niche is something I want to do. Is it reasonable to think that I'll find that niche through thorough exploration of my chosen market?

Richard Loniewski · Answer

Have everything about the deal ready and know it inside out, but I suggest start connecting with investors now. I used to go to 2 or 3 meetups a week and made some great connections. You will be surprised how many investors are willing to JV with you if you have a great deal!

Jacob St. Martin · Answer

Hello Bryan, these are good questions. I was in your shoes a couple years ago. Here are my thoughts about what you should do:

1. Really know your stuff. You want to be really well educated to show to the potential investor that you are serious and someone who is going to make them money. If they start asking you questions and you can't answer any of them it is a bad look.

2. Know your market. When you wake up instead of scrolling on socaial media scroll through zillow. Eat, sleep, breathe your market. I want you to know it so well that when a new one comes up you think, "oh I haven't seen this one before". Analyze deals over and over again so that you know your market well enough that in a 10 second glance you can get a pretty good idea of how the property might do.

3. Analyze the property in depth. Have a spreadsheet that shows a conservative estimate of revenue, expenses, and what their return will be. If it is not a simple project have a summary of the plan.

4. You definitely want to have thought through the partnership structure already. My question to you would be what are you looking for from the partner? To be honest 20/80 is kind of a low split even for your first deal. If it is your only way to make it happen then that is fine. 20% of a deal is better than 0% but I would start off asking for more.

5. Have a deal so juicy that they can't say no. This is how I did it. If it is a run of the mill deal then there is no reason for them to partner with you when they could just do it themselves. This is the hard part because everyone wants an amazing deal and a lot of the people looking for those amazing deals have more resources and connections than you do. This means you need to make a great deal out of something other people are passing up, find a niche that is less explored in your market.

When it comes to posting in the forum, it can't hurt but I wouldn't count on it. You will likely have more success reaching out to people in your current network or expanding your network through things like meetups and networking events.

I hope this is helpful, feel free to reach out if you have more questions!