I was talking to a newer investor this week about the confidence it takes to talk to a potential JV money partner. Trust me, I get that is tough. Here are some thoughts on this after 20 years.
- Confidence in talking to money partners usually comes down to you having confidence in yourself that you can complete a project. So, you need to do what you can first to get some experience.
- Start with smaller projects and work up. Specific to Property Development and New Construction (my specialty), there are several Micro-Strategies that lend themselves well to getting involved without a lot of money invested. There are also ways to control the land through the permitting process without having to actually buy it. That maybe allows you to gain experience with your own funds.
- Get educated. Maybe get a mentor who has experience. Learn from others. Become part of a group of people that share your specific interest. Anything you can do to gain experience will give you more confidence to talk to others. This also helps when you actually have a potential deal, and you are not sure if the numbers work. Being able to run it by somebody with more experience will give you more confidence.
- Building a really good team around you helps immensely too. Don’t try to be a “Lone Wolf” and do it yourself. Having other experts around helps build your confidence.
- People always ask, “Do you find the money partners first or the deals first?” You need to be working both at the same time. Start talking to contacts, friends & family, at parties or whatever, just to let them know that you are doing this type of investment and ask if they might be interested in doing something with you one day. Then leave it at that for now. Don’t be pushy. As you come across potential opportunities then you can circle back with more details and gauge their real interest level.
- There are some mortgage brokers (the really good ones) that have access to both debt lenders and potential equity partners.
- Also remember that when a JV partner does want to invest with you, they are really trusting you more than the deal itself. Yes, the deal has to make sense too, but they are really taking a chance on you. So, do what you can to make sure you have all your ducks in a row. Whatever questions they might ask, you want to have answers too. Too many unanswered questions will turn them away. Be prepared.
We talk about this and so much more in our Residential Land Development as a Profitable Investment online course. To register for a webinar to learn more click here.