There’s many reasons a property development might not go ahead, but never let the money stop you!
Where do you find finance partners?
A big thing to remember here is, not only are you looking for finance partners, but they’re looking for you too. I’ll say that again for the guys in the cheap seats. FINANCE PARTNERS ARE LOOKING FOR YOU TOO! Got it?
Finance partners want to find someone who will give them a great return on their money and they already know that property is a great way of getting those good returns! Not only are they actively looking for investments they, (depending on how big their money pot is) have acquired a broker to look for deals on their behalf!
Finding a finance partner is not hard, an evening on Gumtree, Facebook, Google will open doors up for you.
The hard thing is making sure that you say the right thing to them once you’ve opened up a discussion. The question is not “Where do I find them?” The question should be “How do I approach them?”
With that in mind, here are the 10 do’s and don’ts when it comes to getting a finance partner to trust you.
DO – Uncomplicate things! One of the first things I say to potential partnerships is “I like things nice and simple” and if I get a “me too” back then it’s a huge tick in the box for me! Over complicating things causes more hurdles and strains. Keep it simple and look for the easiest solution to every situation.
DON’T – Go into a partnership thinking “how much money can I make”! This is crucial! This doesn’t just go for a JV partner but any business partner. You will give off the energy that you’re in it for yourself and the partnership will fall apart. You will also attract the wrong kind of partner. My team and I at Dapatchi pride ourselves on win win relationships, it’s at the core of everything we do, and it’s definitely the biggest key to our success! Instead of asking yourself “How can I make this work for me?” Ask “How can I make this work for you?”
DO – Ask questions! When networking at events don’t start throwing your business cards around and letting people know who you are and what you can do etc. Instead, ask questions! Ask lots and lots of questions and then ask some more (We covered how important asking questions is in my last blog too). Let them tell you what their needs are and then you can tell them what solutions you have for them. This will make everything feel organic and neither party will feel “pushed” into doing something that wasn’t right for them. You will also know beforehand if you would be a good fit for them. Nothing annoys me more than this culture of networking that is so forced and needy.
DON’T – Be closed minded. There’s opportunity everywhere! All the time! Always be listening out for it. Again, this is not about you overly talking about your business but listening to other people and thinking about what opportunities you have to add value to them! If you don’t yet have an “opportunity” then speak to them hypothetically. Start by asking “what are you looking for?” “What do you need?” Find their problem and solve it.
DO – Trust your instincts! This is probably the number 1 thing that I would say to people. I have turned down many a JV partner or “conveniently” lost their number because they were not coming from a place of partnership or a place of trying to add value. You can feel the energy of a conversation and if you get an uneasy feeling in the back of your head or your stomach that’s your subconscious telling you to be cautious! Many people push those feelings away but don’t! It’s not “woo-woo” or “heebie jeebie” it’s all the things you’ve learned throughout your life but forgotten, so listen! It’s your subconscious mind trying to communicate with you.
DON’T – Be part of the “I’ve got to value my time” school of thought. I can’t tell you how much that one gets me going! I’ll give you an example; one of my team contacted an estate agent the other day asking a few questions about the area, they would not give any information unless we paid £50.00 as they were “valuing their time”, so we thanked them anyway and moved on to the next estate agent! We ended up bringing 25 flats to market, but we went with the estate agent who gave us a few minutes of their time and helped us!
Remember you’re building relationships, the person you’re “doing a couple of favours for” might introduce you to the right person down the line. You never know what the future holds and one good turn now could reap in millions later. Trust me! I have done countless hours of work for “free”, but they have never been wasted and that’s the difference!
DO – Be prepared. Have all your paperwork in order and your numbers worked out! How unprofessional do people look on Dragon’s Den when they don’t know their profits or how much their turnover is. Do not be that person! Know your stuff backwards, forwards, sideways 100% and this will build another layer of trust within your potential finance partner. They are looking for security, safety and a due diligent partner, not knowing your stuff gives off all the wrong signals from the start.
DON’T – Over promise and under deliver. If anything under promise and over deliver. What I mean by this is; don’t go in with the “best case scenario”, be realistic, because the “best case scenario” may be the thing that gets you the finance but you’ve not left yourself a safety net on anything that could potentially go wrong! This is a recipe for disaster. I see it from my mentoring clients who are just getting started, they send through their figures and they’ve squeezed the development in order to make a few extra pounds or put the end value at the highest it could possibly go. There’s a time to push for the best but this is not it. Be realistic! It will keep you safe!
DO – Find deals that have great returns! Sounds simple, however, there is no point going to a finance partner with a deal that only returns less than 20%, there’s not enough profit in it for you or them, so build those relationships with your estate agents, find the “off market deals”, hit the streets and look for those empty spaces where you think there might be opportunity. As these are the deals that will bring in more returns and more safety. It is very difficult to cut a small pie several ways, so make sure you’ve got a big pie!
DON’T – Attach yourself to the outcome. You’ve got a meeting coming up with a potential finance partner and you’re nervous, you’ve got all your paperwork and you’re desperate to come out of the meeting with full finance secured for your deal! That’s what you want! Wrong! Do not attach yourself to the outcome, by this I mean don’t expect that you’re going to come out with anything other than a new contact, if they go for the deal then great! But if not you want to make sure you’ve positioned yourself for the next one. Once you’ve let go of the outcome you’ll feel a shift in how you approach finance meetings and a weight off your shoulders!
Remember; property is a journey, it’s a chance for personal growth and development and a chance to live life on your terms. Keep pushing and growing and the profits will come, don’t force anything because that’s when you will encounter potential business partners that shy away from you. Be patient and keep building on your skills, network and experience, but, more than anything, never give up!