I am not sure that I am posting this in the right place.
I have come across a really good deal for a 96 unit apartment complex, and the person I believed would be partnering with me on the deal is unable to come up with the necessary funds.
I am trying to figure out the best way to find a new equity partner to help me be able to close this deal. I'm not going to sugar coat it - this is my first deal of this type. However, I worked as a property manager on a property in midtown Manhattan and am familiar with getting struggling properties performing.
So that said - where and how should I be looking to meet someone? Should I be looking closer to the property (which is out of state, but near family I have in the state where the property is located) or should I be looking closer to me?
Any help or input would be greatly appreciated.
Thank you in advance -
An equity partner for a 96 unit complex sounds like a pretty tall ask. As the price of business goes up, I think your track record and relationships have to speak for themselves. On my first deal with anyone, I would not do more than 50k, and even that would have to be with someone who has the track record. At that price point, you would be looking to collect a lot of partners.
What's your out? Most likely contacting close friends and family. Loads of deals are carried on the wings of friends and family rounds. People who know you will take a bigger risk to see you succeed. These investors will believe in you because they know what you can deliver. I would get a good looking prospectus out, and makes sure the terms are sweet.
If the deal makes sense, then the money will appear. What you have to do is crunch the numbers. Show an understanding of what they mean and how to take the property from "a" to "b" and the payout for that. Explain the exit strategies, both long term planned and other potential exits of necessary.
Show true numbers based on rent rolls, true expenses to include property management of not accounted for by owners, as well as ALL costs even if you will be doing some of the work for free initially. Project out your capital expenses, initial repair costs to get top dollar rents etc.
Prove that you are competent in the evaluation and the actions needed to turn the property around and it may be hard, but I believe you can find the money.
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