The prevalent line of thinking is that you show investors the high rate of return on the deal first.
That thinking is incorrect.
One student shares his revelation:
“Lance came along and enlightened me on high returns is the last thing that you show them even though it’s last it’s very, very important but the first three things are what you put it in there and then once you put pre-disposed, control, low risk and high return. Once you get all that lined up, you don’t have to do much talking. After that, you put it there, it’s in black and white and it sells itself.“
2 Responses to Aha Moment Video: High Return – Saving the Best for Last
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One must learn to understand human nature and how they think. Most of the things that drive us as humans have not changed over centuries. As Lance has stated preservation of money ranks far higher than return on money.
This hierarchy is not likely to change anytime soon. Therefore if you just talk about a return on investment you will lose 95% of your prospects because you have presented your business opportunity out of sequence.
Good point! Most investors are generally expecting a high rate of return, so it’s not necessary to stress this point in your initial presentation. I have found a very effective additional perk in getting a reluctant investor to finance 100%. I offer profit sharing on the increased future profits of long term deals. I’ve found that investors will give a better deal initially if your presentation contains some perks that other apartment complex buyers don’t generally offer. The profit sharing shows that you are serious and give the investor something good to think about along with the initial deal. I recently offered $5,700,000 on a 120 unit complex with 100% financing, and the seller was actually excited about the additional cash flow! My offer was initially going to cut his cash flow in half, but the additional future funds increase would eventually cure that problem, especially since I was offering something that none of the other buyers even considered, and was not going to cost me a substantial amount in reality. The offer is still pending, and the complex had recently been rehabbed, so it was a very attractive offer and deal overall. Thanks again Lance for your efforts!