Professional · Evans, GA · Member since 2017 · 28 posts · 8 votes
Hi BP,
As I'm actively raising funds, and searching for investors for a syndication deal, I had multiples offers to purchase a list of accredited investors interested in the multifamily segment.
Has anyone ever purchased a list of that sort, and had any kind of success with it?
Apartment Syndication · Southern California · Member since 2015 · 71 posts · 194 votes
9y
@Sergio Fetter, that's a good question. Over the years I have had a number of list brokers reach out to me - some rather aggressively - to try to sell me a list of accredited investors.
I've never had any need to or interest in purchasing a list, however the one guy I did talk to for a few minutes gave what seemed to me pretty high prices for a product (the list) of unknown quality. As @Ivan Barratt mentioned, by the time you get the list many other people likely have already tried to use it, and that's assuming the people on the list are actual accredited investors to begin with (which you basically have no way of verifying!).
@Percy N. really hit the crux of the matter though: people invest with you because they trust you and like you, and that comes down to relationships. While I'm sure a small percentage of people do, I don't personally know anyone that has made a major investment from a cold call. The best way to get started is with your existing circle of influence, as well as the methods Percy mentioned. The good news is this: once you do a good deal or two with your first set of investors and prove yourself, they will start referring other investors to you and your business will start to grow exponentially from there.
Finally, what @Lennon Lee said is critical as you do NOT want to get on the bad side of the SEC! If you don't solicit and only take investors that you have a preexisting relationship with at the time of your deal, you can syndicate under rule 506(b), which is generally cheaper, easier, and allows you to take "sophisticated" investors. Once you start soliciting, such as mailing or calling a list, you have to operate under 506(c), which is more complicated and puts a lot more responsibility on you. Both are valid ways to do it, just make sure you use the right way!
Rental Property Investor · Miami, FL · Member since 2015 · 179 posts · 292 votes
9y
Sergio,
Congrats on getting it going with what I assume must be a nice deal.
Since I've never heard of those type of lists I probably am not the best one to provide advise.
What I do know from experience is that depending on the type of syndication it might be illegal to advertise or promote an investment to someone you don't have a previous relationship with and it's within your network.
Under Rule 506(B) you are not allowed to do general solicitation for your offering even if it is to accredited investors. You can, however, do it under Rule 506(C).
Consult all this information with your attorney before moving forward with the purchase of such list.
Further, I've found there are no shortcuts but it's worth a try. It really depends on how often those names have been circulating. If you don't have great sales and networking training I recommend you start reading up on the subject!
Developer · Philadelphia, PA · Member since 2015 · 2k+ posts · 904 votes
9y
Sergio Fetter , as an investor in several syndications, I will say that most investors are skeptical of cold calls.
The best chances to get them to invest is via an existing trusted relationship or referral from a trusted source.
You can form these relationships locally via meetups and other events. Have you considered partnering with a cosponsor who may have these relationships already?
Good luck!
Apartment Syndication · Southern California · Member since 2015 · 71 posts · 194 votes
9y
@Sergio Fetter, that's a good question. Over the years I have had a number of list brokers reach out to me - some rather aggressively - to try to sell me a list of accredited investors.
I've never had any need to or interest in purchasing a list, however the one guy I did talk to for a few minutes gave what seemed to me pretty high prices for a product (the list) of unknown quality. As @Ivan Barratt mentioned, by the time you get the list many other people likely have already tried to use it, and that's assuming the people on the list are actual accredited investors to begin with (which you basically have no way of verifying!).
@Percy N. really hit the crux of the matter though: people invest with you because they trust you and like you, and that comes down to relationships. While I'm sure a small percentage of people do, I don't personally know anyone that has made a major investment from a cold call. The best way to get started is with your existing circle of influence, as well as the methods Percy mentioned. The good news is this: once you do a good deal or two with your first set of investors and prove yourself, they will start referring other investors to you and your business will start to grow exponentially from there.
Finally, what @Lennon Lee said is critical as you do NOT want to get on the bad side of the SEC! If you don't solicit and only take investors that you have a preexisting relationship with at the time of your deal, you can syndicate under rule 506(b), which is generally cheaper, easier, and allows you to take "sophisticated" investors. Once you start soliciting, such as mailing or calling a list, you have to operate under 506(c), which is more complicated and puts a lot more responsibility on you. Both are valid ways to do it, just make sure you use the right way!
Syndicator of Large Apartment Buildings · Glen Mills, PA · Member since 2009 · 1k+ posts · 1k+ votes
9y
@Sergio Fetter I have bought lists to do direct mail for both locating large MF deals and locating accredited investors.
Think of this approach of buying a cold investor list as the long game.
Meaning, and as others have stated, it is all about creating, developing and maintaining a relationship.
My guess is you aren't doing a 506(c) offering so you are prohibited from soliciting a deal out of the gates.
What you can do though is provide really valuable educational content about you, your business, why you are the best and only person they should be working with.
Your content could be a Free webinar, book, dvd, report, phone consultation, or a combination where the prospect takes an action and you begin your relationship journey.
The above works and I have raised millions doing so.
However, and this is really important, if you or your budget only allows one outreach or you have limitations in your follow-up, I would suggest you save your money and focus on networking via BP or your local REIA.
If you go the DM route, and most people don't do it, make sure you map out the strategy from start to finish.
Rental Property Investor · Cincinnati, OH · Member since 2017 · 258 posts · 207 votes
9y
I get calls all the time from people who have the lists. I am never interested. Most of the time, I screen out calls because they are from stock pushers. There are occasional real estate deals that come that way. I have never done a deal off a cold call and think most investors would probably be the same way.
Investor · Austin, TX · Member since 2013 · 933 posts · 1k+ votes
9y
Lots of good comments above. I think of broker / dealer lists and operations where hundreds of folks are cold calling and getting warm leads then forwarding those to folks willing to buy the lists. I've been solicited before, its usually "hey, I am going out of business, tired of a phone tied to my hand all day and have a list of 3K names and all have done at least one deal. I'm asking $10,000 and this will be gone by Monday." Highly skeptical and probably scams mixed in there as well. Not worth buying.
As @Brian Adams and @Percy N. suggest, this is a relationship driven business grounded in best practices of thinking about the long game instead of a short term transaction mind set. There are several strategies around designing a comprehensive approach to growing a strong network of clients and prospects. It takes time and practice on what is working and not working to find the best use of your time.
Here's a couple articles to get you thinking on that. Developing a track record takes time but that can be enhanced with purposeful creation of your own business web site, blogging, podcasts, newsletters, books, networking events, etc. You want to give your time and knowledge away to others as you continue to grow. As you grow and see success, you have more to share with others. This content can be a mix of practical success (results in your deals / track record) and relationship / knowledge share to help your clients / prospects get more educated. Key is to be viewed as credible source in your area of expertise.
Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
9y
Purchasing a list like this is not your best avenue to locate accredited investors. As everyone has stated, this is a relationship business and a cold call on the phone about investing money is going to get a quick hang up from me and most anyone else.
You need to meet your own accredited investors and firm relationships. Biggerpockets and your local RE meet ups are a great start. Referrals from family, friends, business associates, your doctor, dentist, CPA, etc are other good places to start. You can also join a country club or hang out in places that typically have higher net worth individuals.
Specialist · Tampa, FL · Member since 2012 · 933 posts · 492 votes
7y
@Sergio Fetter
I never knew such list exist!?
Raising capital is all relationship building. It’s a process. A process many folks don’t want to believe.
It’s sort of like playing the dating game. Cultivating relationships take time to raise equity. Plant the seed, cultivate the relationship then harvest.
Most people want to plant the seed then harvest. You have to be patient when searching for equity partners if they’re currently not in your network.
If you have a blazing track record then it maybe easier to get someone to invest into your deal without them knowing you first.
Most importantly there’s a group out there called the SEC and according to their guidelines you need a pre-existing relationship with anyone who you’re looking to raise equity from.
Please be patient and do your homework. Wise man once told me this as well ... people don’t invest in deals. They invest in other people. And usually people that they “know”.