3 Questions to Anticipate When Presenting an Apartment Building Deal

by | BiggerPockets.com

When starting out, I recommend that buy and hold investors look at smaller deals, as I did. It’s a good way to get your feet wet and learn the game of investing. It’s also a way to build a track record as a successful investor and landlord. You may be able to do deals of this size with your own money or with private loans via the buy-renovate-rent-refinance-repeat method (BRRRR). Once you expand into apartment buildings, you may need to raise investors to come into the deal with you.

Related: Is it a Bad Idea to Buy an Apartment Building for My Very First Deal?

3 Questions to Prepare for When Presenting an Apartment Building Deal

Most deal syndicators make the mistake of talking about the deal, money, and cash on cash returns to start selling the investment up front. I have raised money for seven deals to date and have found that investors typically have the same three questions. They may ask them in different ways, but most investors ask the same basic questions, and the first two don’t have much to do with return on investment or the deal itself.

  1. Can I trust you? This question typically gets worded differently than that, and it might sound like “what is your track record” or “can I speak to some of your past investors or references.”
  2. How will my money be protected? This is an easy question to answer on a private loan deal, but for an apartment building where the investor will get ownership of the building with you, it’s a bit more complicated. Be prepared to explain the entity structure and how they are attached to the investment through their ownership of the LLC or LP.
  3. When will I get my money back? It’s at this point that you get to start talking about the actual deal, but the focal point should be the exit strategy and return of investor capital. You can also talk about financial returns because if you did a good job on questions one and two, the investor will have enough confidence to make their final decision.

Be sure to watch the video for more detail on the topic. Once you watched, leave a comment below so we can get into a conversation.

I look forward to hearing from you! 

About Author

Matt Faircloth

In 2005, Matt founded The DeRosa Group along with his wife, Elizabeth. At the time, the two person company owned and managed two assets – a single family home and a duplex. Over the last nine years, they have grown the company to a 12 person team owning and managing over five million dollars in residential and commercial assets throughout the central NJ and Philadelphia area.

One of DeRosa’s mantras is “to make money while making a difference.”

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