I'm looking for investors to raise capital to demolish and rebuild in a booming neighborhood. The numbers are fantastic but I can't even get any investors to have a conversation with me. Is there a right and wrong way to approach a potential investor? I'm new to this, but I know this is a great deal and I want to make it happen more than anything.
Your experience level will count, though if it is a verifiably great deal not quite as much. A demo build is a tricky project for a newbie (not saying you are one, but don't know). Have you run it by a trusted expert? Maybe post the full details here and ask for feedback. Get together a proposal that shows a thorough budget and projected ROI and pitch like there's no tomorrow!
If you are "new to this" then it is a risky deal for the investor even if the numbers look great. You need to partner with somebody who is not new to this.
Yes, Brant Richardson, I missed that Sean is "new to this".
Sean - partner, partner.
Brant, Marshall, thanks for replying. In my case I do have experienced people on my team: two experienced investors (rehab) and a close personal relationship with somebody already doing this exact type of deal. Also, my father is a seasoned home builder and contractor and has an existing relationship with the zoning people in this particular city as well as relationships with all the contractors needed to get the job done on time. All of these people have proven track records, but I unfortunately do not. I'm worried that my inexperience combined with my age might make investors skeptical. I'm going to an REIA meeting this Thursday to try to drum up support for my project or at the very least get some feedback. Do you guys think if I could show them that I have a great support system, an experienced team, and a proven method (there are two other companies as well as my close personal friend doing this same type of deal over and over and over and over) they would be more likely to sit down and talk?
Also, it may be important to include that the risk is greatly minimized by how substantial the return is. Even if this home sold at 50% of it's market value after it is completed, investors would still make money.
@Sean Bowman You are going to want to create investor materials that explain in detail the background and experience of everyone on your team, as well as all of the aspects of this specific transaction, and all of the projected financials etc. If you don't have well written docs created yet, I would hold off on asking anyone for money until you did.
"a close personal relationship with somebody already doing this exact type of deal" - that sounds like a good partner.
A John D. said have a great packet of information and be able to present it like a polished professional.
Why don't you ride shotgun for this one...have one of the experienced people out front and take less of the profit. Better some portion of a deal than 100% of no deal.
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