I Have An Investor, How Do I Find The "right Property."
I have an investor, but now I need to find the "right property" so he'll buy. Any thoughts?
I have an investor, but now I need to find the "right property" so he'll buy. Any thoughts?
Yes we all have many thoughts:
Why don't your investor teach you the ropes, tell you what he needs/likes to buy then you go get it?
John Locke has the manual on this site covering how to begin 1-2-3. I sugest you start at those 2 thoughts and then you add some more.
Go get it boy!
Are you saying that you know what he is looking for and don't know where to find it? Or are you saying that you are looking for the "right property" but you are not sure what the right property is for your investor?
If you know what he wants and can't find it, give us some more specifics on what he is looking for. If you aren't sure what his needs are, then you need to find out what he wants to buy. I am assuming that you have an experienced investor that knows what he wants. If he is new to investing and is not sure and is hoping that you will provide something, you are in for a long period of fears and concerns before anything will happen.
Are you birddogging for the investor or are you going to be co-owners if you find the "right property"?
Thank you both for your insight. Basically, I have a guy who says he'd invest in the right property. He gave me no boundaries just said that he has cash to spend. As I read this I know it sounds broad, but I am a SERIOUS newbie and I am looking for some guidance. Thanks.
Person goes into a high end store. Walks up to the personal shopper areas and request that a buyer help them find what they want.
Personal shopper ask the buyer what they want.
Buyer says I have cash to spend and I want a good deal.
Personal shopper, being the professional that they are, try to dig deeper as having cash and wishing to be ride of it provides no guidance.
Moral of the story - you do not have enough info to start. If the investor does not know how to answer the question then find a different question. Figure out how long they want to stay invested. How do they view risk vs. reward? What amount of money would they put into one deal? Do they need cash each month or just capital gains?
If you do not know what questions to ask, go to the library, the book store, the show here on TCI and start reading.
John
PS. The value they think you bring to the table will be influenced by how impressed they are by the questions you ask.
[addsig]
Get the book on Bird Dogging as starter, it is found on this site. That will cover the basics and get you started on how to find properties that might fit your parameters.
I generally don't like partners with more money that I have unless I have done business for a long time. TOO easy for me to get the 'experience" and them to get the profit.
If I do need financing then I want everything to be in writing and iron clad up front no exceptions.
[addsig]
I also recommend finding your local REI club and attending. A lot of times you can find a property or a lead there. You can then bridge the gap between your investor and whatever you find.
You DON'T have an investor.
You MAY have a prospecive investor but I suspect that you have a major time waster.
A real investor ALWAYS knows what his investment criteria are. There are about a million guys out there who are willing to buy when they see "the right deal" unfortunately unless they can give you more information than that the odds of you bringing them a deal they will actually do are almost nil.
The problem is not finding deals, there are always millions of deals floating around out there. The problem is eliminating deals you don't want to do. The guy who tells you he's looking for "the right deal" has done nothing to narrow the field and is therefore a waste of time.
I used to compare this process to a funnel where fewer and fewer deals can clear each successive section of the funnel.
At the top of the funnel is all the real estate in the world.
Just below that is all the real estate in the world with owners that want to sell.
Below that is some other filter until finally you get to a very limited number of properties,
"I do rehabs within 30 miles of my house where the acquisition price does not exceed $100,000 and the renovations are primarily cosmetic and the house is on the south side of the street because I like to include nicely landscaped back yards with sunshine." (Not at all my kind of deal, but someone probaby has such a set of criteria)
At one time my investment criteria included that it had to be within 15 minutes of Lake Shore Drive in Chicago. I wouldn't even talk to brokers who brought me deals in Schaumburg.
At another time I would only look at buildings that had between 15 and 85 units.
Or whatever.
It doesn't matter what these successive filters are but any real investor KNOWS what his criteria are. He can tell you at the drop of a hat. You can wake him up from a sound sleep by splashing him with a bucket of ice water and as soon as he's done spluttering he can tell you whether he is interested in your deal or not in 30 seconds.
Anybody who won't explain to you how he makes his investment decisions is wasting your time-- either get an explaination or move on. Either he doesn't know his own mind (in which case he's not only wasting your time he's wasting his). Or he knows but won't tell you (in which case he's playing some kind of a mind game)
BustinJustin,
Glad to meet you.
The next time a carnival is in your town hire a "carnival barker" to teach you how to "pitch" deals to someone, maybe even learn how to have the quarter stay in the plate so you can win a cupie doll.
If you want to become a professional in this industry, learn from the professionals, albeit through a book, course or talking with a pro investor, this is what puts you on top of your profession.
What I know is good deals find me I do not find them, this is done with the proper marketing. If the right deals are finding you, then so will the real investor, nothing complicated about this proceedure.
John $Cash$ Locke[ Edited by JohnLocke on Date 06/23/2004 ]
Hi BustinJustin:
Please ask the investor how much money he wants to invest, and for how long and what type of returns/profit/share he wants. Please explain in detail that a "good deal" can down the road can turn into a "bad deal".
Get everything in writing and then find the deal thAt suits his requirements. There is no dearth of deals and they are available all over the place.
SAYANA
BustinJustin,
You have gotten some very good advise from some previous posters that you will come to know are "Pros". I suggest you take their advice.
Also, you may want to ask this investor how many properties he has invested in thus far. This may be an indicator. Good Luck.
Dave
[addsig]
Thank you all very much for your time and effort in this. I can see that I have a lot of work to do in this matter. I'll take all your advice and see what happens.
BustinJustin,
If you have a guy willing to spend some cash, you might try to talk with him to narrow down what might make him happy. You should at least know what he intends to do with the property since this will greatly determine what you should be looking at.
The menu is huge and much of it is covered within TCI.
Does he want to turn a quick profit or does he want to buy and hold.
If he wants to turn properties there are several ways
1) Buy at a discount sell at market
2) Buy at a discount sell at higher discount
3) Buy at a discount rehab and sell
Selling here includes lease options and there are many flavors of buying at a discount.
If he wants to buy and hold, you should find out what his goals and limitations are;
i.e.
1) The property must be local (yes or no)
2) Appreciation is more important than cash flow (yes or no)
3) Short term seller carry-back with baloon (yes or no)
My concern is that if you follow this to its logical conclusion, since he has set no boundaries, then any property should be "the right property". I think in reality you will be on a very time consuming goose chase without the benefit of knowing what a goose looks like. He probably doesn't either! I suspect that you may have (or will) bring back a managerie of properties and he vetoes by saying "I don't think this is a goose (right property)".
If you can at least get him to give you more specifics at least as to his goals, you will waste less of your time spinning your wheels and if you post them here , we can likely be of more help.
Regards,
Ed[ Edited by edmeyer on Date 06/23/2004 ]