Imagine a room full of a group of investors. You ask the question: “So, how many investors in this room are seeking more money to do more deals?” Every single hand goes up after this question is asked! Active real estate investors are typically looking for two things: money and deals. Both are critical to growing your portfolio — regardless of the type of investor you are.
Most investors get to the point where they “tap out” of their own money and begin to think about raising private money. They have some flips and/or rental properties under their belt and are looking to expand/scale their business. They very quickly come to the realization that they will need to find money partners to fund their future deals. We started out like most investors — utilizing our own money and getting loans from close friends and family. Then we got to a point (about 7 years ago) that we were able to exponentially grow our multifamily portfolio by raising private money (both private loans and private equity).
If you are in the process of raising private money for a buy and hold project or fix and flip project, congrats to you. We encourage real estate investors who ONLY have a track record and some deals under their belt to raise outside money.
While there are so many articles and blog posts on how to raise private money, one less discussed topic is what to do when you have the two critical pieces in place — deals that need funding and potential money partners who want to lend you money. When we are raising a fund for apartment building complexes or fix and flips, something we always do is put together a marketing presentation to share and review with potential investors. It is not enough to just show them the deal itself. They want to learn about your track record, become informed of your past projects, and know that you’ve done your due diligence in studying the market where you are about to purchase, renovate, and either rent or sell.
There are critical pieces of this marketing presentation that are imperative to include in order to answer potential money partners’ questions and prove that you have your act together!
Here are the areas that should be included in any marketing presentation you put together.
How to Analyze a Real Estate Deal
Deal analysis is one of the best ways to learn real estate investing and it comes down to fundamental comfort in estimating expenses, rents, and cash flow. This guide will give you the knowledge you need to begin analyzing properties with confidence.
8 Elements You Should Include in Your Marketing Presentation
1. Your Bio
this should include when you started your company, where you are based, and what your focus is. Most importantly, potential investors care about your results. How many transactions have you completed? If you flip properties, how many have you completed? If you own rental properties, how many do you own? Bottom line — what is your experience?
Related: How to Win Over Private Money Lenders or Partners for Your Deals
In your bio, you should answer the question what success have you had in your business? What has been your profitability? Investors want to see results, minimize their risk, and protect their money. So they are asking the question why do business with these people? You need to answer this question with this bio! Discuss your track record and the wins that you have had.
2. Previous Projects
If you have a track record, then you should be able to create a couple of “case examples” that display the success of these projects. For example, we are currently raising a fund for fix and flips. So we included past projects in this specific market that give the following information: (1) purchase price, (2) rehab cost, (3) project timeline, (4) DOM (days on market), and (5) profit of the project. It is important to show what you have done with other projects to give the investors a certain level of comfort with what you can do moving forward.
3. Pictures, Pictures, Pictures
I really love to include pictures in our marketing presentation. As they say, “Pictures are worth a thousand words.” For the current fix and flip fund we are raising for, we have included before and after pictures of other fix and flip projects. For an apartment building complex that we raised a fund for last year, we included actual pictures of interior and exterior shots of the building. It is huge to give a visual to your potential investors. The investment feels more real.
4. Market Analysis
You have to be knowledgeable and have confidence in the market in which you are doing business. This might seem SUPER obvious, but I have seen time and time again many real estate investors get caught up in the “deal” itself and lose sight of the actual market the deal resides in.
For this section, you want to begin with the big picture. You want to give some type of general overview of the region itself. For example, if you want to raise money for an apartment building in New Jersey, then you should share some type of data that answers the question, “Why New Jersey and why NOW?”
5. Economic Overview
This is a hugely important area regardless of whether you are looking for money partners for fix and flips or rental property.
- Employment: What does the employment look like? Are there growth sectors? Who are the biggest employers? Are there positive signs, such as a new corporate headquarters getting built? Most importantly, you have to show not only job stabilization but job growth. If there more jobs being added, then there will be a need for more housing. I always like to add the logos of the biggest employers in the area as well.
- Demographics: These typically include socioeconomic characteristics of a population expressed statistically, such as age, sex, education level, income level, marital status, occupation, religion, birth rate, death rate, average size of a family, and average age at marriage. You certainly DO NOT need all of this information in your marketing presentation. However, it is helpful to include the characteristics that are pertinent. We tend to include population (is it declining or growing?), income level, and education level — to name a few.
6. Other Important Facts
- Tourism: I really like to include statistics about tourism in our presentation. Tourism is a huge economic engine for many areas, and tourism can contribute hugely to an area’s economic development as well.
- Transportation: As I have shared, we are putting together a fund for fix and flips in a major city in the United States. Our partner found a statistic that shows this city having the third highest percentage of individuals who both live and work within a mile of the central business district. This is a huge selling point to why there is a housing need close to this district. This might not be relevant for every area, but it was for our market research.
7. Investment Strategy
This is a brief overview of the properties you are looking to raise money for. In a marketing presentation we put together last year for an apartment complex, we described the property’s history, unit mix, unit amenities, unit layouts, and where the value add opportunity is within this investment. You also want to include highlights of the property and/or deal as well as your exit strategy. Remember, potential money partners want to minimize their risk as much as they can. They want to know how long you are going to have their money and when they can get it back (in case they want or need to).
8. Financial Overview
This is arguably the most important piece when you are marketing an opportunity to a potential money partner. We tend to include financial projections for both the base year (income and expenses), as well as five-year projections (especially if it is a longterm hold project like an apartment building project). You also want to be as transparent as possible with showing the sources and uses of the money raised. For our apartment building raise last year, we showed how much both the general partner and limited partners would receive. Investors appreciate you being as transparent as possible with how money will be raised and what it will be used for.
In summary, you have to put your “potential money partner” hat on as you create your marketing presentation. Investors (like most people) are tuned into one main radio station — WIIFM (what’s in it for me). You should have a top 10 talking sheet ––these are the “selling” points on this market. Have the questions answered BEFORE you meet with your potential money partners — Why X area? Why now?
I hope this article helps you best prepare as you put together an amazing marketing presentation for your potential investors. Keep putting yourself in their shoes and seek to understand their situation. Good luck and hope you raise a lot of capital to expand your business!
Have you ever successfully pitched a marketing presentation? Any tips you’d add to this list?
Let me know your experiences with a comment!