What do Money Partners look for in a deal?

Question

If you are a PML or Money Partner, what do you look for when someone brings you a "deal"?

Is it Cash Flow, Cap Rate, COC, all three or something else?

If it's cash flow, what is the target amount?

If its COC return, what is the target?

I understand everyone looks for something different in a deal. But I want to set some parameters when I analysis a property based on your feedback, so when I find a deal its more appealing when I present it to a PML or Money Partner.

Thanks in advance!

Robin Simon · Answer

Probably need more information, especially regarding type of real estate investment because its going to definitely differ dramatically, some thoughts:

-If its for a rehab "Fix and flip" - definitely more about value, experience, timeline

-You are mentioning more about rental property metrics - if so, is this SFR or small residential or commercial? Cap Rates really don't apply to residential so drivers are going to be much more about credit and value - if commercial, its a whole different thing - more about cap rate cash flow metrics etc

Robert Ellis · Answer

experience and liquidity

Dave Meyer · Answer

@Dominic Richardson Per the other input, I think we need more info.

First and foremost, are you talking about private debt? Or private equity financing? That will change the answers a lot. And as @Robin Simon, stated what type of deal is this?

Generally speaking in partnerships, and in all investments, people are looking for the best risk-adjusted returns. So if you're buying a stabilized cash flowing asset, the returns you'd have to offer a PML would be lower. If you're doing a risky flip, the return requirements will be higher.

Andrew Syrios · Answer

Pretty much the same things that regular investors do but generally with 1) a greater focus on cash flow/cash on cash return than built-in equity or appreciation potential and 2) they tend to be more interested in security and it being low risk than active investors.

Ray Hage · Answer

I am a PML in Florida and also raise money for flips as well. Generally, I prefer shorter timeline fix and flips with at least a 10% return within 6-7 months ideally. Ideally, the property is a SFH up to 4 units and in a decent or better area. Too many dangers if it is in a high crime area in the sense of vandalism, theft, etc. The borrower should have good experience in fixing up the property and working with a solid realtor who can get the properties sold quickly. Ideally, the realtor should already have some buyers lined up that may be purchasing the home.

Jacob Sherman · Answer

PML would only consider bridge, fix and flip or ground up construction from my experience

Robin Simon · Answer

Cash on Cash as a lender (you) or the investor's cash on cash in underwriting them?

What do Money Partners look for in a deal?

What do Money Partners look for in a deal?

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