Rental Property Investor · Orlando, FL · Member since 2012 · 22 posts · 0 votes
I'm going to be presenting to a number of potential investors who will be (equity) partners with us on multifamily purchases in the Chicago area. Does anyone have any suggestions as to what data/research (local and/or national) they have used in their presentations that has been most effective in terms of strengthening your position for the benefits of multifamily investing as opposed to residential and/or putting their money into CDs, bonds, stocks.
I'm not looking for hard numbers - just what research has been most convincing.
Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
13y
Not particular to multi-families, but this is the sort of information I've seen for RE investments.
1) Why is real estate a good investment vs. alternatives?
2) Why is this particular area a good area to invest in?
3) Why is this particular deal a good deal?
4) How does your track record convince potential investors you can make money for them?
5) How is this particular deal structured? That is, where is the money going, who is the grantor on the loans (if any), how are the SEC filings arranged, what is the operating agreement and private placement memorandum. How is the money coming in? How are you getting a cut or getting paid? If your putting in no cash, for example, and retaining a 50% equity stake a savvy investor should laugh and walk out. If you're contributing 50% of the cash, OTOH, you should get a 50% equity stake. And you should be paid for managing the company and perhaps for managing the property, if you're going to be the PM. And, maybe, maybe you should get a small sliver of equity.
6) What's the exit plan? Are you planning to sell? Just operate it indefinitely? If its held indefinitely, do the investors continue to get paid indefinitely?
Now, do realize you have to be careful. Ultimately, your PPM should say something like "this is an incredibly bad investment and only an idiot would invest in it - you will lose all your money, etc." Perhaps not in those exact words, but its going to pretty close, and its going to be clear to your investors that's what you mean. If you don't say that, it can come back to haunt you when (and you MUST assume when, not if) the investors sue you.
Real Estate Consultant · Camarillo, CA · Member since 2010 · 2k+ posts · 1k+ votes
13y
Kevin,
Make sure that you are aware of SEC regulations on a general solicitation. If you do not have a significant previous relationship with these investors you will loose the Reg D exemption, I assume you plan on working under. If this information is totally foreign to you, I suggest you google reg D and the definition of a security.
Rental Property Investor · Orlando, FL · Member since 2012 · 22 posts · 0 votes
13y
Thanks so much Jeff. I appreciate the assistance in keeping me out of the orange jump suit.
I am familiar with Reg D and we've got an attorney who is very familiar with SEC regulations, etc. We already have a pre-existing relationship with this specific group of investors, but plan to start meeting with new investors in the near future, which is what prompted my question about what presentation points have been effective when talking with new potential investors.