BiggerPockets

Everyone is Your Private Investor

Monday, February 08

What?!

Hypocrisy!

It might sound that way since I often talk about how important it is to property target and then market to private money investors when raising capital for real estate investments. No, I haven't gone off my rocker (at least not yet).

So, what do I mean 'everybody is your investor?'

It means that each person you come into contact with in your business falls into one of three categories:

• Potential investor- if you're targeting and marketing yourself the right way, you should come across people more and more that fit the profile of ready, willing and able to place funds with you.
• Referral source - even people who don't have the money or inclination to invest with you may know people that do. Referral source are often overlooked source of private money for new investors just getting started. Many times new investors will give up their private money search upon discovering nobody they immediately know will throw money at them instantly. Referral sources should be treated as if they were investors.
• Within the sphere of an investors influence - you'd be surprised at how small of a world we actually live in. Did you ever run into somebody you knew from a long time ago at an airport or ran into a friend of a friend on a vacation somewhere or perhaps a sporting event? You'd be surprised at how accurate the 'six degrees' of separation thing really is. You simply do not know who other people know, and should thus conduct yourself as if everyone you meet or talk to knows prospective private investors and would be inclined to say something -positive or negative- to them about you based on their experience with you.

The moral of this story is: treat everyone as though they had $1,000,000 to place with you. If you conduct yourself this way, you'll attract private money quickly and seamlessly.

People that have money and are inclined to invest with you may

want to watch you at a distance for a while before they place funds. They might come across your website, be very interested, but take a guarded approach to taking the next step. This is why consistency is important in your private money marketing. Stay on message. Be unique.

Additionally, prospective investors may do a little homework on you. They may ask around. If they find out that you're an upstanding person in the business community, they're going to feel a lot better about parting with $50,000, $100,000 or more.

Something that has become increasingly popular in recent years (which perhaps should have been popular all along) are people doing more background checks on service providers - such as financial planners, child care providers, etc. This makes complete sense: if I was going to hire a financial planner, I'd want to know if they had ever been convicted of fraud or anything else. It's only natural that your private investors feel the same way. They may want to know more about who you are and what you've done before.While this may not involve a full-blown background check, it may be as simple as talking to people you do business with (contractors, agents, brokers).

Don't worry. This doesn't mean you can't get private money if you are working on your first deal (you absolutely can and should). What it means is that your investors want to sleep soundly at night knowing their investment dollars are hard at work with the right people.

When you treat everyone as if they were a private money investor, your world will be opened up to more investment dollars. Your deals will get funded faster and you'll be faced with the happy position of allocating too much money, instead of scrambling for it.

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