First Rental Property

A few days ago, I was approached by someone who was looking to raise joint venture money. I know this person through one of my real estate networking groups. He was looking at putting together a group of investors, raise a significant amount of capital, and buy into a large real estate deal.

The guy definitely had ambition and a vision. However, there was another thing that he had, and it was not a good thing. He also had what I like to call, ‘the creep factor’.

When he was pitching the deal, he came off as very creepy. As a result, I put my guard up, and mentally blocked out everything that he was saying.

There are a handful of reasons that I found this guy to be creepy. Unfortunately, I have come across quite a number of people that have this creep factor. The creep factor often displays itself when people are trying to pitch joint venture partnerships to potential money partners.

Here are some key things that you should AVOID when pitching to a potential money partner.

1) Don’t be insincere. Be honest, and tell the truth.

Generally speaking, people are not dumb. People know when they are being lied to. As a result, when you are speaking to a potential joint venture partner about a prospective deal, be straight up, tell the truth about your analysis of the project, and don’t lie. If you do lie, most people will notice this right away, and this will ruin your credibility.

No one trusts a liar.

2) Don’t be mysterious

Some people think that it is a good strategy to be somewhat mysterious about a potenail real estate deal. For instance they might tell a potential partner, “I have something that I want to talk to you about. You can make a lot of money, but I can’t tell you what’s it about. Trust me, it is a good investment, and you should invest with me.”

There is nothing more sketchy than the statement made above. If you seem like a sketchy character, people will not want to invest with you and they will not trust you. Again, be straight up with people and get right to the point. You can tell them,

“I am a professional real estate investor. I purchase positive cash flow properties with joint venture partners in (Insert you City here). We hold the properties for X years and then we sell them. The joint venture partner provides all of the funds required to purchase the property, and I do all of the work with the property. I search for properties that meet our investing criteria. When we find the property, I am involved with the negotiation of the purchase. Once purchased, I spearhead any repairs and maintenance that needs to be completed. I search for and place tenants into the property. I also manage the ongoing relationship with the tenants. When we are ready to sell the property, I take care of this as well. At the end of the holding period, the money partner first gets back all of their initial investment. We then split the profits 50/50. Also, throughout the time that we own the property, we also split the monthly cash flow 50/50.

This explanation above is straight to the point and it tells your potential money partner, what you are all about. This description is not confusing nor does is create a sense of mystery.  If you are more straight up with people, and you tell them the truth, you will not creep them out.

My fellow REIN member, Chris Davies is very knowledgeable regarding joint ventures.  I really liked this article that he wrote.  Check it out!

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