In my real estate investing business, raising capital is the most important function, right next to marketing. In fact, I think if you had to break down the two most important functions of an entrepreneur, they would be:
2. Raising capital
For some businesses, each of these may rotate #1, #2 or perhaps both are combined into #1. If you ignore either one of these functions in your business, you’ll be awash in red ink.
Fortunately, when it comes to getting private money for your real estate investing business, these two functions are intertwined.
The other day I wrote about how to get private money using the internet. Since then, I’ve had requests to go into more detail on this and, not wanting to disappoint the adoring masses, I will oblige.
First, I’ve got to lead with a big left hook: most real estate investors just get this completely wrong – they don’t use the internet correctly to attract private investors.
Secondly, there’s a lot of “lemming” mentality with internet marketing (“if this persons using this or this company is selling this, then it must work…”). Listen to your mom and don’t jump off a cliff just because your friend Johnny is jumping off. Instead, focus on and learn what works and what doesn’t work. The way to accomplish this in marketing is by testing.
Only through testing and trial and error are you able to know what works and what doesn’t.
Right now I’ll share some tested online marketing concepts for successful private money lead generation.
- Target your website. Your website must be a beacon for the visitor you want to attract. You should have a unique benefit for that particular visitor. Your goal of getting that visitor is to have them take a specific action (call you, get free information, etc.). Your website must signal out and wave at prospective investors. What are they looking for? What problems do they have that you can solve?
- Speak to your prospective investors. Don’t use terms like “private lenders” because most people that aren’t real estate investors don’t know what that term means. You should broadcast a specific and unique benefit to your targeted visitor. For private investors, you want to quickly demonstrate what is unique about your opportunity and why they should request more information from you. Rate of return and “security” rank lower on the benefit scale than emotional benefits, like peace of mind, stability and tangibility.
- Focus on how you will get traffic. If you don’t have visitors – qualified visitors – to your website, you’re just wasting your time. You don’t just want “clicks” – you want “actions.” Cost per click in an inferior metric to cost per conversion. What does it cost for you to get a visitor to take the action you want them to take, tied to the end result you want? There’s a lot of talk about SEO and affiliates, but I have found that Pay-per-Click (such as Google Adwords) works best for getting traffic the fastest and testing your site faster so you can optimize it.
- Your website should serve the specific purpose of generating leads for a sequential, multi-step marketing program where you convert them from curious visitor to qualified prospect to investor. You’re not likely to have someone wire you $100k for a private money deal the first time they visit your site, so don’t shortchange the process.
- Don’t blare at the top of your lungs on every page why you are the greatest company in the world. Focus on the benefits that you provide to investors – make it all about them
- Don’t have anything else on your site except features and benefits relevant to private lenders – don’t have information for motivated home owners to sell you their property, widgets for wholesale buyers, etc. This just muddies up and ruins the targeted message of your site
- Don’t run advertising on your site – this is almost never done tastefully and the small revenue you will gain will be negated by the prospective investors you will lose.
Once you implement the above steps, you will still have to test. You’ll have to test your copy. Test your offer. Test the colors. If you take this stuff seriously, you’ll get a ton of qualified leads. I’ve found that “off the shelf”, template websites for private money are mostly junk and you’ll spend a lot of money and hosting fees for minimal results.
One of my real estate mentors told me a long time ago: “if you’re gonna do something, do it right and do it the whole way through.” This advice has served me well.