What is your process when asked to be an investor?

2 Replies

I have the opportunity to invest in a new townhome development. The offer was presented to me by a friend who is actively engaging in real estate investments. I’ve never done anything like this and I don’t know what questions to ask Or what I should be looking for. At this very moment there is no structure built, just land. If this were you and someone asked for $10,000 to invest in a new townhome development what questions would you initially ask? What homework would you do before considering the offer? 

Keep in mind the the only information I have is that the offer is there if I want to get involved.

@Anthony Watkins Only 10k for a new townhome development? That’s a bargain. Most compact used cars cost more than that. First you want to evaluate your friend’s experience. What has he done in the past? Then you want to go over the offer or contract to buy the land, development plans and his financing for the construction. You also want an appraiser to appraise the finished value of the project . Finally you want to look at his budget, timeline, cash flow and see if it is realistic. And don’t forget permits. Typically development can be tied up for many months with permitting and cost several thousand dollars before it can even get off the ground!!!

I would think it is a scam. Or it is not worth the risk. For $10K I am not sure how much return you would be making. It may not be worth the the risk.

I would ask what security measures they have in place to protect my money.

I would ask for all legal documentation of their company and proof they have done it before with success.

That would be a start.

I would ask for a projected profits calculation etc. etc.

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