Acquiring deals. How far is enough?

Question

So I've found three deals that I would like to bring to some partners. All three make 200+ after expenses and are above 10% cap rate. But here's the problem. The way a partner finances the deal could affect all those factors, right? I've just been penciling in 20% down at a 30 yr fixed as a default.

Also, should I write a letter of intent with purchase options before I bring the deal to a potential Partner? Should I view the property before bringing the deal to a potential partner?

Roshni Patel · Answer

So my two cents, which may or may not have merit. For your first question, if I was in your position, what I would do would show a potential investor the spreadsheet (the numbers) for the particular deal, tell them or better yet, create a document that highlights  the pros of this investment for them (i.e. if it's section 8 tenants, rental guarantee or something of the sort, if it's close to a university, say it, if it's historically had lower vacancy, mention it). This is because when you are talking to your investor you need to sell that property to them. You mentioned "partner" so I assume that you are working partner and they would be the money partner. In that case, when you go talk to a potential partner, I would discuss that skills that you bring to the table and draw upon all and relevant skills or experiences that you may have. Again, as mentioned, I would think it's important give a convinceable and logical argument as to why it's a good investment

In terms of viewing the property, if you are JVing on that property, I do think it's important to check it out assuming it's not too far away from where you are (like if it's half way across the States, okay maybe that's a different story but like an hour or two, it might be worth checking out). If this is a new area you are investing in or your first time doing this, it would give a feel for the neighbourhood, the type of tennants you can expect. All of which I think are useful for when you go to talk to  your investors.