How do you raise money for your “good” deal? The fact is that wealthy individuals typically have their pick of amazing investment opportunities. I’ve heard the saying “good deals are like bus stops; there’s one on every corner.” This doesn’t make your job of raising money an easy task.
Haveyou heard of crowd-funding? This is a trend that has become very popular in recent years to raise capital from many sources instead of trying to find one large source of funds for your project. Although this is a fairly new internet trend, the concept has been around for a long time. Even projects like the Statue of Liberty used a similar concept to raise the necessary funding.
Up until very recently, the world of real estate was not able to utilize crowd-funding, as it has become known recently, but things have changed. There are many real estate crowd-funding platforms popping up and they are pumping out “investment opportunities” left and right. Is every real estate deal a good deal? Are you going to make money with everything that’s presented to you? The obvious answer is a resounding NO!!! Please be careful if you are thinking of investing in any of these deals.
In this world of increasing “opportunities”, it is becoming more important for investors to make their decisions based on the people behind the deals. It is true that many savvy investors don’t just want to throw their money at real estate behemoths like Blackstone or Carlyle, but they aren’t just going to throw money at you either just because you think you have a good deal.
One advantage small real estate operators have is that many investors like to be active in their investments. This is one of the major advantages and selling points we have because we can provide the Limited Partners the opportunity to have an actual say in the operations of the assets and the ability to interact with the General Partner. Investors want to invest in your deals, but more importantly they want to invest in you.
Because of this it is crucial that we present ourselves in the best possible light and with the utmost professionalism. We must rely on the relationships we build and the reputation we leave behind. Always do your best to actually do what you say you’re going to do and help others simply because you can rather than expecting it to benefit you. Keep doing this over and over and over again and you will build that trust and reputation.
Unless you have a group of deep-pocketed investors who blindly trust you and your decisions, you will need to make a concerted effort to expand your investor-base. I will go into further detail in a future post, but I wanted to give a brief idea of some of the things you can begin doing today to build your potential investor base.
- Utilize a CRM (customer relationship management) program to keep track of everyone you come into contact with that could potentially be involved in your real estate career and track your interactions.
- Create a Compelling/Professional Investor Memo – even if you don’t presently have a potential property, you can begin creating a template.
- Create a Personalized Pitch – This can be given in person face-to-face or you might consider making a video to share with investors.
- Network – engage in organizations around your community where the people you want to attract participate. You’ll be amazed by the people you meet if you make yourself available.
- Get professional business cards made with your contact information. You don’t want to run into that perfect investor and leave them without any way to contact you.
There are many other ideas I could list here, but as I said earlier I will expound on some of these ideas at a later time.
Real estate investing is a team game. You will need to build a network of people who trust you and respect you if you want to be successful. The things you do today will shape the relationships you build throughout this career. Stay strong, stay positive, and stay proactive and you too can become successful in real estate.
About the Author: David Carpenter
I am an experienced Commercial Real Estate Advisor with a mission to create wealth for investors through Commercial Real Estate. However, I am also a family man! With 3 kids at home, I spend most of my spare time with my wife and kids supporting them in the things that they love. I like to mix in a little fishing, gardening, refinishing furniture, reading, and watching the Spurs whenever I get a chance.