3 Easy Tips for Earning the Loyalty of Quality Investors

by | BiggerPockets.com

On our last visit, we talked about some of the money myths associated with raising capital, the biggest being that it takes money to make money. The reality is that it doesn’t, but it does take OPM (or Other People’s Money).

If you can show people how you can safely make them money and if you have a vehicle in which to do it, you’ll most likely make money too. It also never hurts to have a purpose that’s bigger than yourself when you’re out there raising capital.

We also covered some of the mistakes you can make when raising capital, such as having the wrong players on your team and raising money the wrong way. Many of these things you just figure out through trial and error. For example, we tried all different types of minimum investment amounts, tiered rates for things like preferred returns, or various investment terms to maturity.

But to be quite honest, the best strategies for raising capital are the simplest.

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Simpler is Always Better

So why do I say that “simpler is always better,” and what do I mean by this?

For one, if you give an investor too many choices, you’ll just make them dizzy and confused. It’s always better to make them feel more secure.

Whether it’s by showing them financials, having a track record or introducing them to your team players, the better you can build trust with your investors and show them that you know what you’re doing, the more comfortable you’ll make them feel.

One of my best investors said to me one time, “I want you to make a killing with my money because I know that that will ensure that you can always pay me.”

His attitude really shows how a positive partnership can develop when the investor buys in to your business model, knows that the investment isn’t just a pipe dream and understands how it can make them money.

But if you’re too much of a cowboy, and you’re giving away the ranch (or paying an unrealistic preferred return), people will be skeptical and think your deal is too good to be true.

When we were starting out raising capital, a close mentor of mine told me, “If you want to raise more money, lower your rates.”

Now, at the time we didn’t have a track record yet, and maybe we hadn’t earned the right to lower our rates yet. But he was right. I can vouch for that since I’ve raised capital over the years with preferred returns ranging between 8% and 21%.

Besides helping them to understand the investment, there are also additional things you can do to help an investor feel more comfortable. This involves making Investor Relations a priority.

Investor Relations

If you’re currently raising capital, what are you doing now? Do you even have an investor relations department?

Sometimes it’s the little things that matter most. One thing that’s critical to investor relations when raising capital is communication.

Have you ever made an investment and then never heard from the management team after that? I’ve had that happen to me, and during that time things weren’t going so well for them.

I can’t stress enough the importance of staying in communication with the investors before, during, and after the fundraising stage, as well as demonstrating that you’re doing your best, which means that you’re doing everything you can to protect their capital.

Customer for Life Program

Communication is really the main staple of any customer for life program.

For example, many realtors sell someone a house, and then the buyer never hears from them again. But top agents usually stay in touch with all of their past clients, and they usually bring in more clients through referrals.

So how can you stay in the forefront for both your current and past investors?

3 Tips for Acquiring Longterm Investors

1. No news is better than no contact

Although it’s best to provide your investors with updates on how the investment is going, if there’s nothing new to report, that doesn’t mean you can’t stay in touch. Maybe try to call each investor once a month just to check in.

2. Provide them with value, not spam

Keep the marketing to a minimum. These are individuals who have chosen to invest with you, so take the time to think of them. When you reach out, provide value or resources that will either resonate with them or be useful for them.

3. Give them something different

What are you doing differently than all the other fund managers out there? What are you doing to take care of their money, and how are you going to take care of them over time? Maybe you’ll have an interactive and convenient platform in place where they can login and view their investments and statements. Or you could get even more creative.

For example, we deliver thank you treats upon investing, and we send out a weekly e-zine as a way to stay in touch regularly. We also hold investor Q&A sessions, which we also stream online. We hold educational webinars, live events and speaking engagements, as well as MeetUp groups nationwide.

But it can also be little things, such as providing convenient ACH payments or allowing investors the ability to redeem shares to purchase notes with preferred access to re-performing notes.


Although we have all of this in place, we understand that there’s room for improvement. We’re continually looking for new ways to assist our investors.

I’ve learned that if you treat your investors like family, the way you would want to be treated, you too can earn the right to lower your future cost of capital, as well as earn a high rate of investor retention. If you treat your investor’s capital like it’s your own money (because after all it’s often someone’s hard-earned money or retirement funds), you will earn the right to utilize their capital for years to come.

So, let me ask you, what are you doing for investor relations and customer retention?

For my next article in this raising capital series, I’ll go into more detail about the advantages of the private placement and some of the best ways to raise capital. Talk soon!

Let us know your opinions in the comment section below!

About Author

Dave Van Horn

Since 2007, Dave Van Horn has served as president and CEO of PPR The Note Co., a holding company that manages several funds that buy, sell, and hold residential mortgages nationwide. Dave’s expertise is derived from over 30 years of residential and commercial real estate experience as a licensed Realtor, a real estate investor, and a fundraiser. As the latter, Dave has raised over $100 million in both notes and commercial real estate. In addition to his investments and role as CEO, Dave’s biggest passion is to teach others how to share, build, and preserve wealth. He authored Real Estate Note Investing, an introduction to the note investing business, helping investors enter the “other side” of the real estate business.


  1. Enjoyed the article Dave, I’m sure many of us with an entrepreneurial mind try to do too much where as you said, it could confuse them & miss out on the deal.

    I use investors $ to cover the down payment for SFH & think my method is pretty simple – ex) for a $95k home after closing costs is 100k, I get $20k & pay them back monthly for 5 years @ 10% making it $425/month in my investors pocket.

    Do you see a flaw in my method? I’ve heard mixed opinions – more pros than cons – but don’t see how this isn’t a good deal. It’s as gaurenteed as any investment with this ROI that I’m aware of. I’d like to hear your opinion as I’m always looking to improve.

    Enjoy your readings,

    • Dave Van Horn

      Hi Matt,
      Thanks for reaching out!
      It’s hard for me to evaluate this method, since I don’t know how much you rent the properties for or how much you cash flow.
      Based on your example, if you mortgage the other 80K in the neighborhood of 5%, plus taxes and insurance, some potential flaws would be if your current bank stopped lending to you or if your properties needed a lot of repairs within the first 5 years.
      A possible option for maximizing cash flow could be to utilize interest only on the 20K.
      If I need to give them back their capital in 5 years, either I sell, refinance, or bring in another investor. I’m not saying this is for everyone, but I usually have easy access to capital and investors for SFH.
      As an investor, I typically only lend to LLCs, and I make sure that I’m secured to the property with a second mortgage. In doing so, I’m protected from usury laws, I don’t need an originator’s license, and the Deed in Lieu would be valid in the event of default. Also, I would be named insured for the 20K. You may already be providing these things for your investors; they’re just what I look for and what I’ve learned other investors value as well.
      I hope this info helps!

  2. Nice article Dave. I like your point, “No News is Better than No Contact”. I want our company’s investors to look forward to hearing from us (progress reports, new opportunities, how our fund is making a difference in the community, etc.) rather than only calling to report ‘issues’ with particular projects. For a future topic, and to your second point, “Provide them with value, not spam”, it might be fun to further consider a list of such ‘value’ topics in reaching out to investors (i.e. monthly enewsletter communications).

    Thanks for your insight.

    Best regards,

    • Dave Van Horn

      Hi Catherine,
      Thanks for the positive feedback! It seems that you’re on the right track as far as communication with your company’s investors. Thank you also for the topic idea. I suppose I could’ve included some more examples of ‘value,’ such as running a investor group or bringing in other experts from my team that may help my investors in other ways. After all, there’s a lack of coordination of expertise for most investors when it comes to things like retirement, legacy, and tax planning.

  3. Great advice Dave,
    I syndicate apartment investments, and send a quarterly update/newsletter to my investors. They seem to appreciate this – it allows them the opportunity to be aware of the progress we’re making and the challenges we may be facing. It also helps that the quarterly updates are accompanied by quarterly dividends!
    I also try not to inundate my investors with more information than they have time to read. I make sure they know the information is available to them, and that I’m always available to answer questions. However I’ve noticed that most of my investors prefer the executive summary over detailed P&L’s and Balance Sheets.
    Great article!

  4. Thank you for a great article 🙂

    I am trying to start investing with private funding, no loans. First off what advice would you give since I have no experience or a track record. Also what is the difference between Joint Ventures and having a fund. Is it not primarily the same thing?

    Faris Yaghmour

    • Dave Van Horn

      Hi Faris,
      Thanks for the positive feedback.
      In my previous article, “Money Myths and the Biggest Mistakes I’ve Made Raising Capital,” I touched on things you can do or show your investors to make them feel more secure, even if you don’t have a track record personally. For example, you could show them your board of advisors and reference their track record, or you maybe you have a top shelf securities attorney or accounting firm that you can show them. I utilized my note seller’s model until I had one of my own to display to investors.
      Regarding your second question, having a fund would involve pooling investor capital to go buy assets or make an investment, and the investors wouldn’t take part or have a say in any day-to-day operations. An example of a joint venture would be if you put up $200K and I put up $300K and we buy a half million worth of notes that we divide up or work through together.
      I hope this info helps!

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