Investing in Real Estate

Five Ways to Build a Top Rate Investor List

In the business of flipping foreclosure or other types of distressed properties, you can never have too many investors. Getting together a detailed list of what each specific investor will and will not invest in will save you countless time 'shopping the deal' so you can spend more time closing them.

1) Research: The biggest way to waste your time - not to mention tick off your investors - is to only bring part of the information to the table. Nobody wants to hear your guesses on the cost to acquire and rehab. Do your research and bring them cold hard numbers and facts!

2) Targeting: If the investor is only interested in 3 and 4 unit multi-family properties, why are you bringing him a single-family home? Now this may sound like common sense, but we all are guilty of doing it, including - gulp - myself. I had to learn that lesson the hard way.

3) Know Your Investor: Investors come in all shapes and sizes; some of the investors I have worked for have lived two houses down from the property being flipped while others have been on the other side of the country. The trick is knowing your investor and how much level of involvement they want. Do not guess that just because of the distance involved, the closer of the two would be more involved in the day-to-day operations. My example above was actually the other way around. With the investor across the country, every penny spent on a deal must be preapproved by him and the one that lived two doors down... I think I saw her twice at the property and once she was just walking her dog.

4) Results: Once you have completed a handful of deals and made the investors money, the word will spread. Now keep in mind that the opposite is true, if you do a lousy job and the investor loses his/her money the entire investing community will know all about it.

5) Honesty: Across-the-board honesty is the always best policy. While in many cases it is bad to provide ‘too much’ information you still should be honest and not deceptive. This goes both ways, being honest with the investor and the investor being honest with you. I have made investors millions of dollars over the years and almost all have been straight up in their dealings with me. However, one in particular chose to 'take the easy way' and stole my share of the profits from a property. Yes, it hurt loosing the cash on my side, but in the end he was the one that lost. The next deal that came along, I took to a different investor, which had double the profit. Who was the real loser in this case?

The bottom line is that honesty will always make you more money and keep you in good standing for the long haul and you never have to worry about looking over your shoulder anywhere you go. There is an old proverb that says when you always tell the truth, you never have to remember what it is that you ever told anyone.