What's 1st. Giving contract or getting investors?

Question

Rookie question

I am in contract for my first deal. All is well for now.

I would like to start looking for my next deal however I know I will need OPM to invest in the down payment. Which leaves me in a quandary.

Can i give a letter of intent to a seller if i have not yet secured investors for a downpayment? and if not,  how can I get investors to participate in a deal that I am not in contract for?

to summarize my question, what comes first, finding investors or finding a deal?

Although a few people have said i can contact them with investment opportunities, this lack of clarity is preventing me from really looking at deals seriously

thank you all for your time

Bob E. · Answer

Given that we are likely to start a recession soon I would hold off on starting any expansion with OPM.  Wait 9 months and you will have a much better idea of what the market is likely to do and be able to get a more secure return.  I expect that a good portion of the people buying at todays top rices will likely be good candidates to purchase subject to.

Scott E. · Answer

No you shouldn't be worried about that. Because if you do find a real deal where there is money to be made (whether it is a high cap rate, value add opportunity, etc) then you always will be able to find a buyer.

The key is finding a real deal. There is way more money out there waiting to be deployed than there are real deals.

Scott E. · Answer

To answer your question as simply as possible, finding a deal should come before finding investors.

The reason for that is because if you find a real deal, it will be easy to find investors or hard money lenders to fund that deal. Plus you don't want to waste investors or hard money lenders time on potential deals because in this market, 19/20 houses you put an offer on you won't get accepted.

Dwayne Poster · Answer

and for me its the opposite. I have list of hungry buyers, land developers, builders, private investors, who I look to serve their needs. I wont turn away from a good deal, but that's largely defined by who's buying. last thing I need is my money tied up while I search for a buyer.

Dan Travieso · Answer

You can certainly give a letter of intent but being that it is a Sellers Market you may have a hard time finding a seller that is willing to accept it unless you make a substantial down payment. Ideally you would work both at the same time, finding investors and finding deals. You can market for deals while attending Meet-ups or advertising for cash buyers (Craigslist for example).

Mordy Chaimovitz · Answer

Brokers are telling me I need to have my funding worked out if I want them to send me deals. Investors  are telling me they want to see the deal before we talk about investing. I am In a catch 22 chasing my tail.

Jon Kelly · Answer

@Mordechai Chaimovitz you should be doing both. You should build a network/pipeline of potential investors while you are seeking a deal.

You don't need anything in writing from investors before finding a deal. Tell your potential investors the type, size and location of deals you are targeting. You'd want them to provide a ballpark of funds they'd be willing to invest with you.

What's 1st. Giving contract or getting investors?

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