I am a general contractor and am just abuot ready to build a 4-plex this summer. How do I approach investors or people I know with money to help finance the build? Whats in it for them?
1. You need to determine what you need from the investor
2. How do you structure the relationship (partnership, loan (debt), a mix)
3. You need to understand the relationship you want thoroughly and be able to say it in a few sentences...concisely, to anyone at any moment. So adeptly that they listen and might react (not just loose interest and say "oh, isn't that nice)
4. You need to have your structure in place. If you are going to partner ,you need agreements. If you are going to borrow you need documentation. This takes some serious planning.
An investor will want to know what you bring to the table. They will always think that their money is worth more than your work. Look around the site, check out this thread:
There are a number of BP citizens who know what you are trying to do , and can help.
Originally posted by @Chris Richardson :
Whats in it for them?
Presumably a return on their investment. If people are earning 2% on their money just sitting in a money market fund or bank CD, They may jump at the ability to get 8,10 or 12%+ returns.
As Ned says, ultimately your investors will want a return on their money but their first concern will be a return of their money. You have to convince your investors that their funds are reasonably safe. Have you built 4-plexes before? Were those projects profitable? Do you have any of your own funds in this deal? Will the investors be on title? Do you have proper insurance? What if you get injured? Will the project proceed? If you can show that your project will be profitable (comps, etc), that you can complete it properly and that you are serious about protecting your investors you will have a much easier time finding money partners.