Deal Making Logistics
I would like to start a discussion about deal making to help clarify some confusions that I have that generally revolve around logistics with execution. Background; I talked my family into starting a rental business 4 years ago, we own about 10 doors right now. So I have a decent amount of experience and now have questions about some more complicated things that I am trying to grow into doing. One thing I would like to do more of eventually is bring on limited partners to deals. I hear on the podcasts all the time (episode #272 being a great example) that you should focus on finding a great deal and approach a potential investor with that opportunity. My confusion is how to lock down the deal. How do I present an offer to a seller that lays out in the contract that I will be seeking outside investment and protects me if I am unable to find the money? We can use a current example I am looking at for the discussion. My agent presented me with a listing in a neighboring city for 27 houses asking 1.8 million which represents a 10% cap rate. Homes are 90% occupied with management in place. I would like to negotiate down to something like 1.5 million. I have investor contacts that I think would be interested in this deal if I were to be able to negotiate that kind of price. Do I negotiate the deal, sign the contract, and then approach my potential investors? If that is the normal course what protects me if I can't find the money? Is that recourse for me to get the good faith deposit back or is the risk I am taking loosing the deposit? Also much is discussed in the podcasts about presenting different types of deals that the sellers may be interested in. How do you go about this when you are going through an agent? How do you initiate a discussion and back and fourth with the seller without having to send a written offer each time? My agent seems only willing to send written offers. Thanks.