Tips on pitching properties to friends and family

7 Replies

Hi ya'll!

I just finished the book Raising Private Capital by Matt Faircloth. Since finishing it my wife and I have been working on a pitch for our friends and family, as Matt suggests, and I wanted to see if anyone here had any tips in this department. Before I read the book I had pitched a property to a friend and he respectfully passed. After reading the book I see where I faltered and, in my eyes, failed him on an opportunity that was a perfect fit for him.

What were some missteps ya'll made on your first, second, third, etc. pitch to a private lender? Is there anything you would highly recommend doing or showcasing in the pitch? Thanks in advance!

Nathan

Nathan, Brandon has mentioned quite a few times on the BP podcast of indirectly asking for funding. Ie, instead of "would you be willing to invest in xzy property?", phrase it as "you wouldn't happen to know anyone who would like to get in on a great investment I have lined up and get an incredible ROI would you?" The hope is obviously they're interested, but if not, they might actually know someone that would be interested!

Hi Landon, thanks for the response! I do that as well and have been for the past year or so. Basically telling everyone I meet, organically of course, that I am investing in RE. That's how my friend got interested in the idea of partnering up. Once I had the deal and pitched the deal to him, it failed miserably because I wasn't prepared.

After reading Matt Faircloth's book, though, it opened my eyes to a second approach, without ditching the one you mentioned. He talks about how he put together a pitch to inform close friends and family about their intentions of investing in real estate and showing them how it would benefit them financially as well if they wished to partner up. I'm not just asking for money, but rather showing them what it would look like and if they would be interested in at least chatting when I have a deal to show them.

Does that make sense?

@Nathan Hann ,

Step 1: Be honest, always.  Never embellish or oversell.  In fact, it's often good to underpromise and overdeliver.  They are your family and friends, yes, but that doesn't mean they want to see projects coming in 10% over budget and returns that were hinted at being in the 15% range coming in at the 5% range.

Step 2: Build your resume.  For the first deal, it would be better for you to pitch someone with whom you don't yet have a relationship.  They can give you honest, candid feedback about what works and what doesn't.  Friends and family often sugar coat or don't feel like they can give you a straight answer, especially if they are reluctant.  Prove yourself, then you can show examples of success rather than untried projections.

Step 3: You're a salesman now.  Think like a salesman.  Salesmen who have a "pitch" often lose the sale.  Rather, you need to spend time asking questions and drawing out their levels of interest.  Some might be interested but unqualified.  Some might be qualified but uninterested.

Example: 

You: Hey Uncle Joe, good to see you again.  How's retirement?

Uncle Joe: Oh you know, lots of golf, but not much else.  Kind of wondering about how the economic recovery is going to come around after all this Covid stuff settles down.

You: Yeah, I've been thinking about that too.  We've been looking at houses as a way to help weather the uncertain times and are considering real estate investing.  What have you noticed about housing in this area?

UJ: Yeah, prices are going nuts right now.  Our house went up 15% in the last three months.

You: It would be awesome to get in on some of that, don't you think?

UJ: Well yeah, but I'm not wanting to be a land lord.

You: I know, it sounds like a lot of work.  What ways are you looking at diversifying your investments to create enough monthly income for you and Aunt Suzie?

And so on....create the open environment to talk about real estate, investing, income streams, etc.  Gauge the level of interest.  If he's inclined to chat for a bit, you can run your plans by him for getting other people interested and ask him what he thinks of them.  Who knows?  He might say, "We'd like a piece of that action."

Thank you Erik! That is a wealth of tips/information! I agree with the salesman part. I am halfway through the book Selling is Human By Daniel H. Pink. It's a fascinating read and full of useful tips. Thanks again for the in depth answer and good luck with all your current and future endeavors!

@Nathan Hann makes perfect sense! I actually haven't read that book yet so I'll definitely have to give it a read. I was always afraid to ask for money just as everyone else is, so I love the mindset shift that we're simply presenting them with an opportunity, rather than asking for a favor.  

@Landon Bleau I didn't even know the book existed until a couple months ago! I've read so many of the BP books and somehow missed this entirely. It's absolutely worth a pickup. And yes, I hope asking for money gets even a tiny bit easier as I get more properties under my belt. Probably my least favorite thing about this whole process. Good luck with everything and thanks again for your added insight on this!