Is there something wrong with my pitch to my investor?

Question

I want to buy an investment property in Claremore OK that is a mobile home on an acre of land, cost $8,000 (I will cover the closing cost) with a monthly rent of $800.

My pitch to my investor was that I would borrow $8,000 from them like a CD for two years.

They lend me the $8,000, in return I give them a 10% a year return on their money for two years.

I pay them 1/24th of their $8,000 ($333.33) and 1/12th of the $800 ($66.66) a month but to make it easy I would just pay them $400 a month for 24 months.

Is there something wrong with this offer?

Land her in Claremore OK is around $4,000 an acre and the NADA guide has this mobile home at $8,462.

Is there something I am missing that an investor wants?

David Zheng · Answer

I've tried this method several times and have only landed funding from close friends and family who know and trust me. Its too easy to run off with $8000. Even a contract for this amount wouldn't really be worth it because suing you for stealing it will cost probably up to half the amount.

Honestly at $8000 you should have the money yourself or get that from relatives. It's not really worth getting an investor for.

Jay Hinrichs · Answer

small deals are very difficult for investors.. because as stated if something goes wrong the cost of collection could exceed the investment..

rip it off of a credit card. and or borrow from relativves is how you do these deals. but better yet save it up and use your own money.

David Dachtera · Answer

@Wade Alderson,

You're not offering any security. You need some way to secure the investor's money.

If you're not using any other financing, offer them a 1st position lien.

Then again, as has been said, it may just be too "small potatoes". Put together a larger package and offer the lender 1st position on everything in the package.

Stretch yourself - get creative!

David J Dachtera

"Success is not a destination. Failure is not an event. Success is a process, failure is a choice."- DJ Benedict

Wade Alderson · Answer

Oh...

So what you are saying is that if this was an $80,000 paying $4,000 a month deal they would jump at it right?

I think I understand now.

Thanks

Jay Hinrichs · Answer

Too small... as stated above , you need to have this kind of cash on hand if you don't your not a very good risk.. if things don't go right.. ( how lender see s it)

Is there something wrong with my pitch to my investor?

Is there something wrong with my pitch to my investor?

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