Asking someone to invest money in a business venture does not always produce the answer that a person wants to hear. When it comes to making money, people who invest money expect a certain amount of return as well as other important essentials. For the real estate industry, knowing what ROI do investors want can help attract the right people to build an investment portfolio.
Net Return on Investment is Key
When soliciting someone for investment dollars, the most important question that will be asked is about net ROI. The immediate cash on cash returns is something that investors are concerned with not the total amount of income that is earned pre-tax.
Common Amounts Invested in Real Estate Include:
3 Important Questions Investors Will Ask
3. What type of Management is Provided?
Most investors are not managers per se. These professionals seek out ways to build their investment without controlling day-to-day decisions. A person who agrees to put up the money to build or grow a real estate business will always expect a professional management of the invested funds.
2. Do You Have an Exit Strategy?
Getting out of a bad investment is not easy for some people. Too much time and work invested into an underperforming business deal curbs success. It is likely that an investor will want to know about an exit strategy to terminate the investment and recoup most of the lost funds invested.
1. What Dollar Amount is My Cut?
It all comes down to how much profit is leftover and who keeps what to an investor. Investors who enter the housing industry seek out ways to build cash flow apart from stocks and bonds. A return of 7% to 10% pre-tax is the industry average for most people although depending on the amount of cash invested these percentages could be higher.
Group Investing in Real Estate Defined
Someone who is short on actual cash although can tap into other sources of funds can easily buy a rental property in most markets. When three or more people split a $120,000 home purchase, it makes the funds easier to acquire and less of a financial strain on the average person. There are several ways to get an investor to invest money in a group buying rental real estate for sale.