How can you use market analysis to persuade a client to invest in property?

This is critical - you must understand your client/investor - in the CRE world when you are raising LP capital, the manager needs to understand the challenges, opportunities, and current portfolio allocations etc that LPs are facing, which will inform you - the manager - to seek 'appropriate' deals for that capital. Ultimately, understanding the cost of equity capital (which has increased today) is paramount. If you are underwriting a deal at 12% net IRR, but your LP capital is now requiring 15%, well then don't waste your time with the 12% opportunity. Must be patient and careful when hunting for product to invest in.

I'm not a residential broker, so my angle is a little different, but similar rules apply. When we find a deal and go out to raise equity (GP/LP structure), we obviously believe in the opportunity itself, but raising the debt and equity capital requires two obvious things: 1. market data analysis that supports the thesis (either on the buy or sell side). And don't obfuscate data, it must be presented it in an unbiased way. 2. present financial implications, threats, opportunities, and overall return projections I could write an essay on this, but for brevity, have kept it short.

Data-driven Insights: Use market data, charts, and graphs to show property trends. Supply and Demand: Highlight demand vs. supply and potential imbalances. Comparative Analysis: Compare the property to others and emphasize unique features. Rental Income Potential: Present rental rates and ROI projections. Capital Appreciation: Show historical and projected property value growth. Risk Mitigation: Address potential risks and strategies to mitigate them. Investment Goals Alignment: Align the investment with the client's financial objectives. Case Studies: Share successful investment examples to build confidence. Market Growth Projections: Present forecasts for future market growth. Tax Benefits: Explain tax advantages related to property.

All round market knowledge and intel but most importantly your own experience of deals you have done in those target markets to give the client the real perspective not just sanitised stats.

Data is all well and good but your client needs a hard headed analysis and your market insights from work you have actually done not a screen full of figures and if as you should you have a strong relationship with the client know when to proceed or not.

In addition to a comprehensive market analysis, it's crucial to emphasise the importance of clear and transparent communication with clients. Break down complex data into easily understandable insights for them and communicate how each piece of information aligns with their goals. Building a strong narrative around the data not only enhances your credibility but also ensures that clients feel confident and informed throughout the decision-making process, therefore also building your reputation. Being a trusted advisor is about fostering a connection through effective communication that empowers clients to make well informed investment decisions.

Consider very carefully whether even the word "persuade" is the correct one to use. If you have to convince your client that this is a deal worth considering, take a step back and assure yourself that your motives are rooted in your fiduciary responsibilities and not somewhere else.

Ultimately - one must carefully consider the financial implications of any investment decision (including the opportunity cost) and balance the proforma projects against the cost of equity and debt (both highly elevated today in 2023). As always, "just because something is for sale, doesn't mean it should be bought"