Where do you find the money to fund the properties?
More often than not, people tend to say, “find the property, and the money will find you.” While we all wish that this stamen is correct, the devil is in the details and in reality, it is actually a little further from the truth. Let me unpack it for you.
As the law of physics dictates, opposites attract, right?! In a sense, this fundamental principle applies to the real estate business, but in an opposite way – instead similar needs attract. I mean that when you have a deal that is perfect for a particular type of investor, if you happen to offer this deal to such an investor in your network, then the chances are pretty high that they will be interested.
Sounds easy, however, let’s decipher the work (the steps) it takes to get to a point where you will have investors, who are waiting for your next project.
Real estate is a people-business. That means that investors prefer to work with people that they know well, respect and trust. How does one get to such point? Well, it takes time, consistent quality investments, and also regular communications to establish and build relationships with potential investors.
As you begin your journey as a real estate syndicator, you need to realize a very important principle: sooner or later, your projects will have to rely on other people money (OPM). Therefore, when starting a real estate investing business and while you are searching for and vetting properties – at the very same time put some real sweat into establishing your network – you will need plenty of time, I am talking about years, to build trusted relationships with prospective investors. Considering the enormous amount of energy and time you will need to move your real estate investment endeavor, you should consider which option would work best for you: build up your own experience, which as I said will take some time or partner with an experienced investor – someone that has already built a successful track record that you could leverage when speaking to investors. While there is no right or wrong approach, a lot depends on how soon you will need to rely on OPM.
Again, how do we get to the point where investors will make their funds available to you? By simply building the relationships with your potential investors from the get go and along the way. You should learn more about them, their families, their hobbies and interests, as well as what they do for a living. By doing so, you are able to paint a full picture of your potential investor. And one more suggestion, if you happen to implement a specific real estate investment strategy, then you should brand and market to a specific investor avatar (aka “ideal investor persona”), that is attracted to such deals. The numerous hours you will spend with your investors and learning about them will help you develop this type of avatar. This simple yet sophisticated strategy will help you open the doors to funding opportunities, which other investors would be missing out because they have not built their avatar.
So, let’s define the steps needed to take to build such an ideal client persona:
First, you need to flesh out a prototype of your ideal client. The prototype would include such information, as name, title/occupation, experience, and family status. You may also expand it to include gender, approximate age range, income size, and preferred place to live: rural, urban, suburban, etc. Think about their communication preference style and their manners, which could range from casual to professional.
Second, put some thought into your ideal client’s goals and values.
Third, determine where does your avatar get their information: is it newspapers, friends, social media platforms. If the latter, which one is a more common place for them: Facebook, LinkedIn, Instagram or something else.
And lastly, figure out their main challenges and pain points, and how can your offer may alleviate their pain points. You should make a list of possible objections that investors may voice to your solutions. Once you spell out each of the steps with your avatar-specific points, you will be able to target your potential investors much better and smoother.
In summary, finding and funding a deal requires at the same time to pay attention to both: implementing a project search strategy, and building a network of investors. Work on both simultaneously or build a team/add a partner and split the responsibilities.