Having your investors committed before you even put a property under contract is critical when syndicating apartment building deals. Without upfront commitments from investors, you won’t be able to submit offers confidently and it will be difficult to get the money in time to close.
This “catch-22” keeps most real estate investors on the sidelines. This frustrates me because it doesn’t have to be this way.
Last week we talked about Why You Should Raise Money to Buy Apartment Buildings. This week I’ll share with you a secret that will let you raise money from private individuals long before you have a deal under contract.
This means you can get started today, right now.
The secret is so secret that I’ve never heard it revealed anywhere else.
The secret will stun you with its simplicity.
The Secret Revealed
The secret to getting financial commitments from your investors long before you have your first deal under contract is to … make a up a deal.
You “make up a deal” by creating a “Sample Deal Package”. This document contains everything about your fictitious deal including photos, information about the building and area, actual financials, your business plan, projected financials and returns. You will use this Sample Deal Package to speak with potential investors. You will even use it to build credibility with other professionals you’re trying to recruit to your team (like commercial real estate brokers, lenders, insurance agents, attorneys etc).
The difference between a Sample Deal Package and a real one is that all of the information about the deal is accurate (photos, location, financials, etc), except that you don’t have it under contract. The other difference is that your fictitious purchase price may be lower than the asking price so that you achieve the desired returns for the …read more