Choose your investors carefully. You’re going to be stuck with them for a long time.
Many people will tell you that there are two types of money; smart money and passive money. But there’s also another kind – painful money.
This is particularly the case if you have multiple investors in a project. Investors expect attention and they should get it if they have invested their hard-earned money with you.
However, if one person sucks up all of your time and resources without adding any value, then that will stop you from paying attention to other investors which they deserve; and prevent you from focusing on delivering your development.
Ironically, when an investor acts in this way, they act against their own interests by diverting your focus from getting the project built.
I learned a long time ago that when selling new houses there are some buyers who are not worth dealing with. Why? They are just too painful.
It’s not the same as selling an existing property where its caveat emptor and you simply walk away. New home buyers expect a high level of service. This is something that caught me off guard when I completed my first development in 2004.
Once you accept an investor into your project, you’re stuck with them for a long time. Be careful who you choose to work with. If you know what you’re doing, you want investors who will leave you to get on with things.
Investors who have completed multiple investments, but have never done a development themselves can be the most dangerous.
Look at an investor’s track record. How has their relationship been with other developers they have invested with? If it’s not been good, that should ring alarm bells for you.
Having the right investors in your project can make the difference between success and failure in a project. Be careful who you let in.
