TALKING TO A POTENTIAL INVESTOR or JV PARTNER · 1. Increase your Credit Limits: •Real estate investing is an industry that requires you to have a large amount of credit at your

TALKING TO A POTENTIAL INVESTOR or JV PARTNER

OVER THE NEXT 90 DAYS, WE WILL COVER THE FOLLOWING

MODULE 1

Drafting your Vision

MODULE 2

Identifying the Gap

MODULE 3

Identifying your Obstacles

MODULE 4

Mastering your Money Mindset

MODULE 5

Joint Ventures

MODULE 6

How to Make Big Money with Small Apartments

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MODULE 7Getting and Negotiating The

DealsMODULE 8

Talking to a Potential Investor or Joint Venture Partner

MODULE 9Drafting your Story into a

PresentationMODULE 10

Positioning yourself to Attract Joint Venture Partners

MODULE 11Getting Online

MODULE 12Systematizing the Process

ANY QUESTIONS FROM MODULE 7?

WERE THE NEGOTIATIONS FUN?

WELCOME

Change your perception of success while building $5,000/month passive income through real estate investing.

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POTENTIAL INVESTORS

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LAW OF CERTAINTY

CERTAIN THINGS

DONE IN A CERTAIN

WAY WILL ACHIEVE

CERTAIN RESULTS.

RAISING MONEY FOR A JOINT VENTURE

• The game must be played in

a specific way, in a specific

order.

• If you do this, results are

going to occur.

• Playing the game out of

order is more like gambling

and could result in losing

out on potential investors.

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YOUR IDEAL INVESTOR IS:

• High net worth individual or couple.• Understands and appreciates the value you

bring.• Does not want to be involved in the deal.• Will refer friends and business associates.• Low maintenance.• Retired Real Estate Investors.• Team members.• Pleasant to be around.

HOMEWORK:

• Take some time to identify who your ideal Investor

would be.

• Give your brain a target to work with.

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THE CLEARER YOU ARE IN YOUR VISION, THE FASTER THINGS WILL HAPPEN FOR YOU.

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HOW TO PUT TOGETHER THE ENTREPRENEUR, THE CAPITAL

AND THE OPPORTUNITY

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Figure out your dreams and

create a vision to make them

come true.

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Understand that real estate is full of setbacks, so without dreams and a clear vision, you will quit the first time you meet resistance.

Create a detailed blueprint of your wants, needs and plans so that it can provide you with focus and motivation while you are challenged through the ups and downs of real estate.

Having a clear vision will attract others toward you and your deals.

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ENTREPRENEUR & CAPITAL OPPORTUNITY

Answer the following questions:

• Why are you in the real estate investment business?

• Why do you need to succeed?

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Make list of people who inspire you or who you aspire to be like.

• These people can be heroes, mentors or coaches.

• Following these people or working with these people will help you create your vision for your business and life.

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TAKE THESE STEPS TO BUILDING YOUR CAPITAL OPPORTUNITIES...

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1. Increase your Credit Limits:

• Real estate investing is an industry that requires you to have a large amount of credit at your disposal.

• Before you get started, you will want to make sure you have as much credit available to you as possible. You will do this through increasing your existing limits or applying for new cards.

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2. Build your team:

• Building your team is an ongoing process that will change as you grow.

• When you first get started, you will want to assemble a team of the best people you can find.

When starting out in Real Estate Investing, your goal is develop your professional network and find:

• Mortgage Broker• Lawyer• Accountant• Realtor• Contractor• Property Manager (if you plan to work

with one) • Coach/Mentor• Marketing Strategist

The quality of your team will dictate the quality of your

business

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3. Build your Joint Venture Proposal Capital Raising Binder:

• This binder acts as your business plan and will be indispensable for raising money through investors.

• This proposal will take time to build and will require extensive organization and preparation in order to stand out.

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4. Analyze 100 deals:

• In order to create a paper track record, you will want to review the numbers on paper for 100 deals.

• This step is an extremely important task for people just starting out, who do not have a track record.

• It allows you to gain practical experience before investing your money.

• You will become familiar with the areas you are interested in investing in, including price points, what types of property is moving and what type is not moving.

• TIP: You will find your realtor is a great resource for you if you are missing data.

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Investigate your social media networks to determine your warm market:• Generate a list of people who you think would be interested

in investing in real estate.• Generate a list of people who you think would be in your

cold market (otherwise known as the people who would not be expecting a call from you).

• You will also want to spend some time creating a list of all the people you know as well as an estimated amount they would be willing to invest. TIP: Don’t stop this list until you have one million dollars in potential capital.

ENTREPRENEUR CAPITAL OPPORTUNITY

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Start branding yourself on social media:• PROVIDE VALUE!!• Share relevant real estate information on social media.

This will help you to brand yourself as a real estate expert to your cold market.

• Contact your warm market to gauge their interest in investing in real estate.

• Once you start talking to your warm market, you will want to build a potential investor list that you can draw from once you have a deal to present.


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Shop your deal to your interested investors.• Unless you are an established real estate entrepreneur,

taking the time to sit down face-to-face with investors is the best option for success.

• This is your opportunity to present your binder and educate them on the deal. You will want to review when the deal will return their capital and how they

• will make money. At this point in my career I send out emails with the Executive Summary of the Deal.


• Get the investors interested in the deal and get them committed to closing the deal.

• Give them a deadline.

• Show them a copy of a typical joint venture agreement.

• Obtain financing for your deal through your mortgage broker.

• Once you begin writing offers and get a deal under contract, you will want to make sure you include two things:

• A due diligence period

• And escape clause in case you cannot find an investor in time.

• If there are insufficient funds or if you are having second thoughts, you can drop the deal.

• Acquire the property.

• Fix any loose ends

• Prepare for renovations (if necessary)

• Have your Property Manager ready to jump in. 30


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Though it is not necessary, we work with managing partners who look after the renovations and work with

the property managers to increase rents.

Our role is to manage our relationships with our investors. This is a great time for us to obtain referrals from your

new investors!


COMMON CONCERNS & OBJECTIONS

FOR POTENTIAL INVESTORS

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COMMONCONCERNS ABOUT

YOU

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CONCERNS ABOUT YOU

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Have you done this before?

The model of real estate that entrepreneurs use has been proven over and over again.• If you have experience: I’ve proven this model over

and over again and it continues to work because the majority of wealth in the world is made or held in real estate.

• If you do not have experience: My coaches and mentors have proven this model over and over again and it continues to work because the majority of wealth in the world is made or held in real estate.

CONCERNS ABOUT YOU

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Can I talk to one of your other investors?

• Though you are willing to allow potential investors to talk to current investors, it is important to get permission first.

• Don’t freely give out personal information without confirmation from the investor.

• If you do not have any investors: • Explain this is your first deal and that is why you are

making you such a generous offer. • Mention that you are working with a team who has

done this many times before.

CONCERNS ABOUT YOU

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Why are you talking to me at all?• I’m an entrepreneur with an aggressive growth

mindset. I have big ambitions but just like you, I can’t reach my dreams alone.

Do you have any references?• I have many. Is there someone specific you would like

to speak to.

CONCERNS ABOUT YOU

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What if you take off with my money?• You’re absolutely right, I could run off to Costa Rica

with your money but it’s in my best interest to do legitimate business and legitimate deals with you because I will make way more money over the next 20 years doing business with you. We both get rich over 20 years of business. No one gets rich on a smash and grab.

CONCERNS ABOUT YOU

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How do I know you’re not stealing?• You don’t know if I’m stealing or not. All the fees I take

are disclosed up front and my business model allows me to make the most money off of profiting with you, not against you.

CONCERNS ABOUT YOU

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How do I know you are honest?• You don’t know if I am honest. You can only trust

someone if you understand their self interest. • My self interest is aligned with yours because I

make big money in my business model when we succeed together.

• I don’t get rich on fees and you’re investing your money into this but I am investing my entire life and reputation.

CONCERNS ABOUT YOU

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How did you learn to do this?• I learned to make money in real estate through three

methods:• I paid for training. • I worked for free for a measurable amount of time• I have paid the tuition to the school of life and I

paid in blood, sweat and tears

CONCERNS ABOUT YOU

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I like this but I want control.• I can appreciate that you would want that. I have a proven

system and every detail has been proven to be profitable and I would advise against modifying the system.

• You could do it on your own but would you? And could you?

• If you are serious about wanting to do it on your own – a good place to start is by being part of a JV with others. You’ll see first hand the work involved and you’ll have a better idea if indeed you’d like to do it yourself.

CONCERNS ABOUT YOU

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Where do you get your money from?• I get my money from private investors like yourself

who want to support local entrepreneurs and make a healthy profit. • I have no problem with paying fair returns and

letting my investors come along for the ride.

I don’t think you can pull this off• I understand you might feel that way. What about this

venture specifically do you think I will fail at?

CONCERNS ABOUT YOU

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You’re not putting any money in, why should you get any of the profits?• There are three parts to any venture:

• The Capital (money)• The real estate entrepreneur (me)• The property/deal

• I’m bringing 2/3s to the table, you’re only bringing 1/3 plus I’m doing all the work. • In theory, you should get 1/3 of the profits and I should

get 2/3s. I’m going to be very generous and offer you ___.

• If 50% is the split, Mr. Investor, where in life can you bring 1/3 to the table and walk away with half? The answer is divorce. I think my offer is very generous.

CONCERNS ABOUT YOU

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How do you make your money?• I make a small amount of money on deal fees and a large amount of

money on deal profits. I will never get rich on fees, we both get rich by doing profitable deals over the next 20 years. We pay back the principal to the Investors usually starting at the beginning of year 2 once the building is optimized with the majority of the cash flow.

• When we refinance and you have all your money back that is when we see our share of the profits. In the mean time we are building equity through forced appreciation and mortgage paydown.

Who have your investors been?• My investors range from all walks of life from business associates,

friends and family all the way up to seasoned business people and professional doctors, dentists, pharmacists, lawyers.

CONCERNS ABOUT YOU

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Have you ever lost money?• No, I have not lost a client’s money yet, but there have been times

when we worked with a deal throughout the term and walked away with no profits for ourselves. We have also injected capital when necessary. That doesn’t mean that I will never lose money and the law of averages says eventually I will take a loss at some point. I assure you that I will do everything in my power to protect your money first and grow your money second.

What would you do if you lost money? How would you handle it?• The agreement that we have says we absorb the loss depending on

our percent of ownership.

COMMONCONCERNS ABOUT YOUR

COMPANY

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Are you licensed/regulated?• I do not belong to any regulatory body. I am a private entrepreneur

who shares the same integrity and values as the entrepreneurs who built this great country. There is no regulatory body for private entrepreneurs like myself and there never should be one.

Are you incorporated?• Yes, I am incorporated. Each apartment building we buy a new

corporation is formed. You can choose to own your shares in this corporation personally or through your corporation.

CONCERNS ABOUT YOUR COMPANY

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Why real estate?The majority of the wealth in the world is made or held in real estate.

Who’s your team?I work with a diverse team of people from all different backgrounds. Who do you specifically want to know about?

Who is doing the bookkeeping and accounting?• I keep all paper records of the money spent on the venture and

my professional bookkeeper compiles it into a profit and loss statement that will sent out for each tax season and will be ready within 90 days of liquidating the venture.


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I don’t believe you can make money in real estate.• Not everyone makes money in real estate. Most of the

world’s millionaires and billionaires though, have either earned or hold a lot of their wealth in real estate.

• Do you have a better plan?


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How do I know you’re not mis-managing my money?• You don’t. You don’t know if I’m managing your money properly or

not. However, I do keep meticulous records and every dollar of the venture is documented and you will get a full profit and loss with full disclosure annually and again when the venture is finished. It’s in my best interest to manage the money well because I make the lion’s share of my living off of my deal profits.

How do you use a bank to finance your properties?• We usually get 75-85% financing from a bank. We learned very early

on that if we wanted to grow our business the way we wanted we needed to bring in private money from Investors such as yourself.


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Who controls the money?I will control the money and report to you semi-annually with all income and expenses

How long do you keep my money for?• I keep your money until the venture is refinanced. The business

model I use estimates that we should be able to refinance within 5- 7 years. We have done so in as quick as 18months. Of course this isn’t a guarantee, real estate is ill-liquid by nature and we cannot sell tomorrow if you need your money. If you need liquidity, this may not be for you.

What is the money being used for?• The money that I raise is for three things

• The down payment purchase of the property• Funds to fix up and operate a property.• A small slush fund to prevent cash calls• Closing costs.


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What happens if you lose all my money?• If we lose money in this venture, then you will lose some or all of

your principle. Investing has risks and so does real estate. If you aren’t prepared for the risks then you aren’t prepared for the rewards either.

What if I want my money back after I give it to you?• Sometimes unexpected things happen. In our agreement it offers

us and the other JV partner(s) first right of refusal. Real estate is illiquid in nature and it may take months, maybe even years to get your money back. Are you okay with this?

What is the liquidity? How do I get my money back if I change my mind? • Real estate is not liquid and we cannot sell tomorrow by 5pm. If

liquidity is important to you, this may not be the right thing for you. What are your liquidity needs?


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Will you segregate my funds or do you co-mingle my funds?

We open a separate bank account for every single property we own. If it is a house – the non-active partner (you) can go online and look any given day. You do not have any signing authority though.


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How do you find your deals?

I am a professional investor and many deals that the public never gets to see are brought to us because we have a history of buying.

• We use three methods to locate properties.• Networking• Marketing• Negotiating


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Can I pick my own deals?• You are investing in me as an operator and you are

investing in my system for picking deals. If you were adept at picking your own deals we wouldn’t be talking right now.

• I bring deals to you that fit the criteria of the business model that we outlined and I won’t waste your time with something that doesn’t fit the pre-agreed criteria.


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What if the market goes down tomorrow?• If the value of your home went down tomorrow, what would you

do? We buy for long cash flow, mortgage pay down and long term passive income. We hold til we can refinance or sell.


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Why Regina (your market)• I select markets with sound fundamentals. Profitable real estate

markets have three things in common. • Positive net migration• Transportation• Local Industry

• I focus on cash flow, mortgage pay down and forced appreciation plays.


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What happens if the property floods or burns down?• We carry a commercial insurance that covers our

venture. If you would like to review the insurance, I can get you a copy of the policy. For apartments we also carry rental offset insurance to cover rents during the rehab phase.


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What protection do I have against a lawsuit or what if we get sued?• You have two layers of protection against a lawsuit.

• A disgruntled person will first sue the corporation and

• We carry liability insurance.


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Do you run into issues with The Securities Commission?**DISCLAIMER** Check these statements with your lawyer or a securities lawyer before using this answer.• All of my investors fit into one of the following three boxes.

• Friends, family and business associates.• $150K minimum• Accredited investor• Because of this, all my investors are exempt from receiving a

prospectus or offering memorandumWhy do you need my money?• I don’t. I don’t have to do any deals and you don’t have to do any

deals and we don’t have to make any money. I don’t need your money, I want your money because I want to make money with your money and help us both get rich over the next 20 years.


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Why don’t you do high-end properties?• We focus on small apartment buildings in the mid

price range that have solid or potential for solid cash flow.

• We find our best value there.

What happens if our exit strategy fails? What are plans B and C?• If the market is not in a good place to refinance in 5-

7 years we hold until it is. Or we can sell at a loss.


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Do you withhold the best deals for your preferred investors?

I do not withhold better deals for better investors. My interest lies with running the pipeline of my business and making sure there is a forward flow of deals. If the forward flow is continuous, we all will make money. If the forward flow stops, then none of us make money. I am loyal to the most senior investors that have been with me the longest and when you invest with me, I will be loyal to you just like I am to them and I know you will understand.


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Are we going to use lawyers?

We use lawyers for each and every deal. They prepare the mortgage documents and the JV and USA agreements. We all usually have to have independent legal advice from a lawyer other than the one preparing the documents. That can be your own lawyer or someone arranged by our lawyers but not in our firm.


COMMON CONCERNS ABOUT YOUR

OFFER

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CONCERNS ABOUT YOUR OFFER

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Are we going to sign a contract?• Yes, absolutely! We have a joint venture contract prepared. I use

standard contracts but if you need something customized, we can customize the paperwork as well.

Can my lawyer review the paperwork?• Absolutely he can. I just want you to understand the interests of your

lawyer though before you bring it to him.• Your lawyer’s job is to protect you and so he will always say, “don’t

do any deals.” When you bring the paperwork to your lawyer, don’t ask him IF you should do it, ask him HOW do I do this and be protected.

Lawyers are trained to look for what could go wrong with a deal. That is why we need them on our team so they can point out those things no matter how minute the chance.


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How is my money secure?• You are on title and mortgage. As per our JV

agreement (that you will sign) you will have all those details covered.

What holds the money?• All funds go directly to our lawyer to go towards the

purchase price and closing costs.


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What fees do you charge?• We charge an acquisition fee and an administration fee and we

may or may not charge for other services that pertain to the venture as outlined in the JV agreement. I don’t get rich on fees, I get rich on the profits of the venture.

Are their hidden fees?• I do not make money from hidden fees, everything that we spend

money on is disclosed in the income and expense statements and if you ever have any questions about an invoice or a way we spend money, please ask me and I will explain everything.


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What kind of return do I earn?• I am flexible in the returns I offer. What kind of return is good for

you?

What is a good return?• What have you earned in the past?• **Do not answer this question. Keep deflecting until they say a

number first.

Will you make monthly payments to me?We make quarterly payments.

Is this guaranteed?• Nothing in life is guaranteed, anyone who tells you that something

is, is lying to you.


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Am I going to be the only person in this deal? Who else is investing?

• It depends on the deal. • We usually have multiple investors on one deal and they, along with

their portion of ownership, is disclosed in the JV agreement. • There is a good chance you will meet the other investors when

signing the mortgage documents and JV agreement. • Annually we have a dinner and AGM to:

• Go through the income and expenses for the previous year • Discuss and challenges and opportunities • The AGM is usually in April.

• If something comes up that cannot wait until the AGM, we will call a separate meeting.


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What is the best case scenario?• The best case scenario is we renovate fast, operate

efficiently and increase the value of the property through rent increases and/or reduced vacancies. We refinance, pay back your original investment. You maintain your % ownership . We have done this in as little as 18 months.

What is the normal case scenario?• The normal case scenario is we refinance in 5 to 7

years and return the balance of your principal then –again you maintain your % ownership and start to receive quarterly cash flow.

What is the worst case scenario?

• The worst case scenario is we have higher renovation costs than expected, higher vacancy than expected and/or lower rent increases so it takes us longer to get your money back to you

What is the nightmare scenario?

• The value of the property never increases. The cash flow goes to repairs, maintenance and vacancy. But in 25 years our building is paid for by the tenants and we own a building free and clear.

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CONCERNS ABOUT YOUR CONTRIBUTION

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CONCERNS ABOUT YOUR CONTRIBUTION

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The number one question that kills deals:How much are you putting into the deal?

When someone asks that question, what is the assumption?• That their money is more important than your time.

Investors need to be educated that money is not the most valuable part of the transaction.• You can have all the money in the world but if you don’t know how or

where to invest it, it won’t help you. • The expertise, time and energy you put into a project is an invaluable

part of the process.

EXERCISE: • Make a detailed list of all aspects of a deal from start to finish. Then

ask yourself, is that worth 50%? When your answer is yes, you use that list to present to your investors.

OBSTACLES

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OBSTACLES

•Most people end up living a life by default when the goal should be to live a life on purpose.

• In order to live on purpose, it is important to clarify what end result you are seeking for yourself and how much money you will need to make that happen.

WHAT ROLE WILL REAL ESTATE PLAY IN ACCOMPLISHING YOUR GOALS?

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COMMON OBSTACLES IN YOUR WAY:VISION

• You should have a clear vision of what your ideal lifestyle would look like.

• You should have a clear idea what that lifestyle will cost you on a monthly basis.

• You should have a clear vision of what your monthly shortfall is.

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PERSONAL REAL ESTATE ACTION PLAN

•You should have a clear vision of what role or results real estate has to play in your ability to achieve that goal.

•You should have a clear sense as to how many dollars per door your real estate will produce.

•You should have a clear sense of how many doors you will need to buy at __ dollars per door in order to produce __ dollars a month in order to live the life that you envisioned.

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COMMON OBSTACLES IN YOUR WAY:

QUALIFYING AT THE BANK

• Apartment Buildings are businesses within themselves and are financed based on the Net Operating Income.

• If you are going to build a real estate portfolio, it is imperative that you learn how to play by the bank's rules.

Each JV partner has to provide a net worth statement for the lender as well as proof of funds.

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OBSTACLES

OPTIONS FOR FINDING THE DOWN PAYMENT

• Liquid assets

• Real Estate equity

• High-ratio insured mortgages

• RRSP 2nd mortgages

• Private money

• Vendor take-back mortgages

• Joint Venture partners

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QUESTIONS

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NEXT WEEK

DRAFTING YOUR STORY INTO A PRESENTATION

Your story is important and you will draft your story into a presentation that attracts Investors

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CONNECT WITH EDNA

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www.facebook.com/edna.keep

https://twitter.com/ednakeep

http://ca.linkedin.com/in/ednakeep

[email protected]

306-536-6266

Documents

TALKING TO A POTENTIAL INVESTOR or JV PARTNER · 1. Increase your Credit Limits: •Real estate investing is an industry that requires you to have a large amount of credit at your