I have been speaking to a lot of people lately, about their struggles with the famed “angel investment.” My advice has been much like the inspirational words of the movie 40 Year Old Virgin ; “stop putting the ****y on a pedestal”
( ****Y = MONEY of course……. )
I get it – you are new to property, you have been looking for the “lesser spotted” Angel Investor (someone who will lend you money for a return on the cash, not a profiteering celestial) – and they have suggested they may have £100,000 with your name on it.
You are about to meet them to talk about this for the first time.
You have your investment document primed.
You have been through every potential objection in the world.
The butterflies are rolling, you start to sweat and your throat is drier than an Arabian Flip Flop.
They are interested, but they want Blood – and you just cannot believe they are still listening, so you are willing to give them litres at will – “take more than you need, I can survive on less, I am just happy you believe in me.”
Now listen to me;
NO – GIVE YOUR HEAD A WOBBLE
Never underestimate the power of time and knowledge, to me they are far more important than money can ever be. Money is everywhere, more people have it than you realise – few people have time, and arguably even fewer have knowledge.
My biggest mistakes in property have all come down to over promising (to close someone or something) and under delivering. In the early days of my property investment days I was a tool – I was paying angel investors 2% a month, and whilst that was great for them it put the deals under serious strain, as well as me physically and mentally.
Savvy investors also don’t like it – have you ever heard the saying “if it is too good to be true……”, I lost a lot of potential investment (thankfully in hindsight) because I offered TOO MUCH.
Now don’t get me wrong – Other Peoples Money (both private and institutional) will be absolutely vital for anyone who wants to progress, at speed in the property investment market. We use millions at anyone time, so money in general is vital, but specific money is not, you always have options. Other peoples money is vital for you to leverage, but you also need to leverage the fact that there is so much of it out there.
We work with investors aggressively, they love us, many depend on us (as their income) – and over the years I have learnt some key ways in which we have had success in working with these heavenly bodies;
- Be clear in your offering, and the process. What do you want? For how long? What will they earn? What is the security depending on the investment? What is the legal process (when relevant)
- Do not over-explain, not everyone does (or wants to) understands property lingo. Many investors don’t care for the difference between a BMV and a BLT.
- K.I.S.S – keep it simple stupid. Don’t make it sound impossible, it isn’t – you will just scare them off with your ego/oversell.
- Be ethical and perform. We have faith that we are great for our investors, because we do what we do, when we say that we will. If there is an issue (they happen in property) tackle it in advance, communication is key, tell them what has happened and what your plan is.
- Let the numbers talk for you. All of our deals work – we show costs, we show addresses, we show comparables and if they want to see how our numbers – how they work. Our deals are our CV – our success is from the deals.
- Stop putting the ****Y on a pedestal. If people aren’t interested move on. We can give Mr J Public a far better return @8-10% than they can get themselves through property – if they can do better themselves then they must have the time and knowledge – congratulate them and wish them luck. Don’t be arrogant enough to think you are the only person who can do property – you are actually reliant on the fact that you are not.
In conclusion:
As a property investor – back yourself and back your product. Let your deals talk for you, build raving fans in your investors (plenty of references available on request) and help people do better than they can
As an angel investor – qualify the borrower and their deals. Ask for references. Ask for deal information. Does it stack up, are you comfortable with the investment?
Any angel investment questions from either side please feel free to ask the question. We have vast experience on both sides of the coin. Done well it is the ultimate win-win, combining the time, money, and knowledge of two people. Done badly it is a costly, unpleasant exercise. Do it well. Come see Papa…………….
DANNY INMAN PROPERTY 