12 Essential Points An Investment Proposal Should Include

12 Essential Points An Investment Proposal Should Include

Deal sourcing and packaging, or putting together investment packages to offer to other investors, can be a worthwhile sideline to your own property investment projects.

If deal sourcing and packaging is new to you, check out this article on the benefits it can offer.

When you undertake property deal sourcing and packaging you’ll need to put together a comprehensive proposal for each suggested investment. This will show your investor exactly what’s involved and outline why they should invest in this project.

Here are 12 essential points your proposal should include:

  1. The asking price of the property. Most investors have a ‘ball park’ figure in mind as to what size of investment is affordable to them and what they are comfortable with.

  2. An offer price. An indication of what price level is likely to be accepted for the property. Bear in mind that asking prices and actual sales prices are not usually the same.

  3. You can also indicate a price history for the property, where available.

  4. The ‘basic numbers’ behind the deal. This will help to show the investor what outlay they will require and what return they might expect.

    These numbers will vary according to the type of deal involved (see later). They might include likely achievable rent, yield and ROI for a buy to let, or likely potential selling price and ROI for a flip.

  5. Location details. Bear in mind that many investors have an area they’re most comfortable about investing in, or within which they’re willing to travel.

  6. A basic description of the property, eg. whether a house or flat, how many bedrooms etc.

  7. At least one photo of the property.

  8. More detailed area information. Most investors are aware of the old adage location, location, location. So detailed area information will help illustrate that this is potentially a good location to invest in.

    Focus on providing area information that is related to value, price appreciation and rents/letting potential. For example: Local transport links and distance/travel time to them and local schools. Optionally you can include maps to illustrate.

    You could also include information on local comparables, eg. how the asking price and likely rent and yield compares to similar properties in the area.

  9. Detailed financial forecasts. The basic numbers relating to a property will help investors decide whether a project broadly meets their investment objectives. However your proposal should also include a more detailed financial analysis providing accurate figures and calculations to show them how the deal stacks up.

    The financial forecasts you provide should vary according to your investor’s particular investment scenario and investment objectives. For example:

  10. For a buy to let deal you need to provide:

    • Total overall investment required including mortgage deposit, Stamp Duty, purchasing fees and any repair costs.
    • Mortgage calculations including the LTV and rental cover, to illustrate mortgage affordability.
    • Potential profit taking into account likely rental income, mortgage interest and expenses such as maintenance and insurance plus an allowance for void periods.

    Figures for yield and ROI should be included. It would be beneficial to provide this information per month, annually and on a five year basis perhaps to include estimated capital gain.

    You might also provide this information based on a range of offer price scenarios, to show how different price offers affect the viability and profitability of the project.

  11. For a deal such as flip (buy/sell), light refurbishment, renovation or BRRR (buy, refurbish, refinance, rent) you need to provide:

    • Total overall investment required including mortgage deposit, Stamp Duty, purchasing fees and any repair and renovation costs.
    • Calculations re. mortgage or bridging finance to show facility fees, exit fees, loan interest to also show overall mortgage affordability.
    • Final profit taking into account the likely sale price, selling agent’s costs and selling fees.

    Figures for both actual cash profit and ROI should be included.

  12. Your own impressions and recommendations. Optionally you can provide some information about why your investor should consider this investment. For example, that the area is up and coming with appreciating prices, or that it offers good letting potential and strong leads.

How to create professional investment proposals

You can create a proposal for an investment deal or package by collecting all the available information individually. For example, the estate agent's particulars and other information that is available online. You can compile your own detailed financial forecasts, perhaps using a spreadsheet.

However, PaTMa Property Prospector can do this automatically, enabling you to prepare proposals quickly and easily. It not only saves you hours of work, but enables you to offer professionally presented reports to your clients.

To use PaTMa’s report building feature simply add a property as a prospect in Property Prospector. You can easily pull in information from the estate agent’s listing as well as add your own financial and other information. Then simply click ‘Download’. PaTMa will automatically produce a professional report in PDF format for you to email to your client or print.

Proposal reports can be modified according to your client’s investment scenario, eg. whether a buy to let (including single family and HMO) or a flip project. They can provide them with both the general background information and the detailed financial information they need to help decide whether they might want to invest.

An unlimited number of proposal reports can be produced at no extra charge to the PaTMa subscription. For a small set-up charge the basic reports can even be customised with extra pages and extra data of your choice, or produced with your own company branding.

Here’s more information about PaTMa Property Prospector and how its investment proposal reports can help you successfully source and package property deals.