WHERE CAN I FIND INVESTORS?
In one of my previous articles, “Care Like a Mom”, I equated caring for investors in the same fashion as a mom would care for her children. Just like a mom would keep her kids satisfied, it is just as important to nurture the sponsor-investor relationship and keep investors happy and satisfied following the birth of the partnership.
Continuing down the path of caring for your investors, I would like to step back a bit and talk about how to find investors in the first place. Here are four important points for a syndicator to keep in mind when raising private capital:
1. Investors are in plain sight
Yes, the same folks that invest their money in your syndications are not hiding away in their bank vaults. In fact, they are the same type of people as your family and your friends. They may live in small towns and in urban areas, so you see them when you shop; they may have full time jobs, so you may see them during your commute; or they may be retired, and you might bump into each other at a theater or at a dinner. Your potential investors are everywhere where you visit or just happen to be.
Next time, you go to a sushi place or electronics store, look around you – most likely there is at least one person that can become your potential client. Find a gentle way to engage in a conversation with them and see where it leads you.
2. You are your investor’s friend with benefits
No, not that type of benefit; I am of course, talking about tax benefits. Tax laws favor real estate investing and are full of ways to minimize your tax burden by optimizing Real Estate-related tax-deductible expenses. Besides tax deductions, your investors can take advantage of cashflow that is provided by investing in Real Estate, as well as greater returns than those offered by many retirement accounts, and not to mention bank savings or CD accounts. One of the points that I often repeat in my conversations, newsletters and podcasts, is that Real Estate is a terrific way to grow your retirement nest egg. As many of you have heard me say on many previous occasions; there are real tangible reasons to switch your IRA accounts to a Self-Directed IRA (SDIRA) account. It allows you as an investor to select where to invest your money rather than someone else prescribing that you solely invest in Wall Street. By the way, you can even diversify beyond real estate with this type of self-directed account.
SDIRA is unfamiliar to many investors, so my goal is to spark your interest. Subsequently, your goal should be to research the concept in investing via SDIRA further to determine whether it fits your needs.
3. You have two ears and only one mouth
I love making new friends and striking up conversations with people, whether in a checkout line, at a café or at a networking event. As most people would agree, conversations inevitably make their way to the topic of “So, what do you do?”, so there is no harm in gently directing your conversation to the topic of Real Estate investing. Since this is what I am interested in, this conversation direction and topic become very natural, and more times than not, this topic is also of interest to most other folks as well. At some point of the conversation, I also probe whether the other person is warm to the idea of Real Estate investing, and no matter that their response may be “Yes” or “No”, either response is totally fine. The reason is simple; the more I know about the person, the easier it becomes to understand their goals. Whether they want to invest in Real Estate or are skittish about investing, I pay attention to details by carefully listening and understanding the person's personal situation.
People love sharing their own stories! If you are a good listener, you may be able to make a lot of friends a lot quicker than other people who love to boast about themselves rather than to listen. The bottom line is that you should listen to your potential investors to get to know them.
4. Be a thought leader
The term "thought leader" is a compliment that is earned with a tremendous amount of work. It is given to you; not something you jot down in your self-ascribed biography. A thought leader is someone whose views on a subject are recognized to be authoritative and influential. I am fortunate to be referred to as a thought leader, because it means that people think I am an expert in the Real Estate investment circles. Thought leaders take the time to help others by not only doing a great job, such as authoring articles, giving presentations, creating meetups, and by being interviewed on podcasts, but also making a concerted effort to foster growth and learning opportunities for others to expand their know-how. That's worth a lot of credit. It's humbling when someone else refers to you as a thought leader. Every entrepreneur should strive to attain this type of recognition, because it helps to elevate your brand. To attain this title, you have to put in extensive hard work and dedication. You have to be providing value to others by sharing what you know and by going out of your way to help others beyond what they know.
Bottom line, you would be able to raise investment capital quicker than you think if you follow the points I went over. It is not so difficult if you prep yourself before taking every step, and it gets easier once you gain momentum. If you set your mind to it, you can raise private capital; you just have to know what to do and how to go about it.