Interior Decorator · Denver Colorado · Member since 2020 · 3 posts · 0 votes
My partner and I have created a design/build team for short term rentals. At this point we own two investment properties that operate as short term rentals in Savannah, GA and Pocono, PA. Both of these properties are doing exceptionally well and have given us a great, starter portfolio.
We bought these properties on our own but we are not interested in expanding and creating 50/50 partnerships with investors that are interested in a coc return between 20-30%. I want to get more information about how to structure these deals, create a straightforward presentation/portfolio to present to investors and find investors outside of my family. Any advice?
@Jessica Andrews I believe you mean to say "we *are* interested" in your second paragraph :)
I 100% recommend you make an investor presentation. Don't just talk about the deal you are looking at, but have some slides talking about the systems you use for your current properties, how you continue to manage them, and a financials slide that talks about the actuals dating back as long as you've had them. After you've detailed your experience, then layout the plan for any new deals that you would partner on.
Here, have slides discussing the local market, short-term rental average nightly rates, historical property appreciation rates, expected gross revenue, etc. Also, be sure to be clear on what will be required of any potential partner. Discuss the partnership plan in detail and how the investor(s) would get their return.
Bottomline is that you want to hit on three main points in your pitch:
1) Your experience as a seasoned short-term rental property investor who understands how to scale using efficient systems
2) Why the new market makes sense from an economic and financial perspective
3) Why an investment as a partner would yield them a steady return of X% and what to expect over the course of their investment
That was immensely helpful, thank you! Yes, that was a typo :)
Do you think it would be prudent to create an entire business plan for our own business model or just stick to a presentation for potential investors, or both?
Also, should we create an proposed contract to present to the investor with a real estate lawyer or wait until after we meet with an investor to create a contract?
Knowing exactly where to start has kept me from taking the action I need to start working on getting our next property going. I.e where to find these potential private investors (outside of family and friends) and how much time and energy to spend educating and preparing before reaching out to them.
Either way, the information you provided will definitely get me headed in the right direction.
@Jessica Andrews I would create an entire business plan in addition to the presentation. Will take longer but will help you strategize your goals and create the blueprint to achieve them.
As for the contract, I would wait until you find an investor. You don't want to spend the money to draft something up and then have to re-do it because an investor you find is looking for slightly different terms. With that said, however, maybe start looking for a real estate lawyer now and let them know your plans of looking for an investor and the fact you may soon be in need of their services.