Somebody Wants to be Your Private Money Investor or Joint Venture Partner- What to Do?

Somebody Wants to be Your Private Money Investor or Joint Venture Partner- How to Proceed?

Serious investors know who are the real property investors. They want to see a track record and results. Assuming you have been in the field of property you can easily show completion statements on purchases and on sales. The question arises, who is your investor? What do you know about them? Yes you can go to lunch or have a coffee, but as my colleagues would say…how do you really know what he/she has? You could ask for a bank statement or some type of proof of funds…

A very simple process could be the following:

• Ask your potential investor to complete an investor questionnaire – so you know you both know the goals of the relationship.
• Know their investment commitment, risk thresholds and profit goals.

• Prepared a business plan – a good one, specific to your money raising goals

If you’re missing any of those aspects, moving forward from when a potential investor it could get a little cheeky and a setup for unfilled expectations.  You do not want to be impatient. Don’t ever rush the investor along the process. Everybody moves at their own pace. If it is a good deal, if not this investor…you will probably find another. Considering how terrible returns are in the bond market, interest generated at the bank or the volatility in the stock market, property on an unleveraged basis purchased under valued becomes a potential asset.

Another simple idea that is very powerful ( not enforceable legally) is a commitment agreement.

The commitment agreement outlines the investors commitment to their deal with you. Both of you sign it. It spells out the time frame for placing funds for the investment, the amount, the basic terms of the deal. Once your investor signals that they are ready to move ahead, then you both sign a commitment form. The heads of terms are drawn up and the solicitors start the conveyance process.

Keep good communication with your investors. You can send them weekly pictures of refurbishment progress as well as update them regard tenanting.

If you have any questions please feel free to contact us…