House Auctions - Buying Homes From Property Auction Sites

Investors first want to know the basics and establish if a deal matches their investment criteria and how it rates against other deals currently on offer.

Florida, FL (prHWY.com) September 30, 2012 - Florida, Sep 30, 2012 - Investors first want to know the basics and establish if a deal matches their investment criteria and how it rates against other deals currently on offer. If a deal is presented in a beautiful, large package that has to be read from cover to cover to determine its essence it can be a major turnoff to the busy investment professional and casual investor alike.

House Auctions - The more detailed information is really only necessary when an investor has established its suitability on a general level. What is suggested is first producing a more simple deal overview for the potential investor to review. Begin with the name of the project and a very brief description of the deal (it may be that this is the only document that the investor will look at to determine their interest in your project).

The next piece of information to be included is the cost of the deal and so the equity needed. This part of the document will resemble a traditional debt term-sheet. It shows the investor how much the sponsor is committing to the deal themselves and how much is being sought externally.

One needs to display exactly what the investor will receive in return for their equity contribution. You state what you are going to pay followed by an IRR calculation. The IRR tells the investor what their annual return would be if they invested in your project for x number of years.

Williams Auction - But, investors can also be sweet to deals that have a high long term return if the figures stack up. When the equity requirement and the associated returns over the timeframe have been established, the next step is proving the model. This requires presenting a breakdown of the various cash flows to the investor and sponsor, along with the refinance assumptions that feed the model.

On the supporting worksheets it is best practice to build the model in such a way that when an investor sees a number in the summary sheet that isn't clear, they can follow the links and understand its origins.

Constructing an investment summary can be relatively easy, especially if you have the proforma model outlining all the costs and revenues - it is really just highlighting the right information and presenting it in a clear and concise manner.


About the Author:
House Auctions - Fortna Auctioneers & Marketing Group is a creative, innovative, people-oriented and technologically-savvy real estate auction firm. Our work consistently delivers personal satisfaction and success, resulting in mutual pride by all parties involved in the sale.

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Fortna Auctioneers & Marketing Group
26 E. Main Street * Annville, PA 17003
Phone: 717.867.4451
E-mail: auctions@fortnaauctioneers.com

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