Setting Up a Bright Future Through Profitable Investor Relations

We are really just laying the groundwork, and one of the awesome amazing things about syndication or even just multifamily in general, is you have the opportunity to bring in investors, so you both can benefit. Benefit not only from the investment but from the economy scale of being able to do a larger project together, and ultimately reach whatever is your goal and your investor’s goal at the same time. Whether it be generational wealth, cash flow, tax advantages, whatever would be the components. However, there is a number of steps that we partake in that have made this helpful for us, and we generally do this in a four-stage process. Of course, lots of times when we go out and being a salesperson, on the point, it's always focused on the close now. That ultimately, we are trying to create a relationship and really just trying to do something that would benefit people for many years to come and having these investors that aren’t only in your first deal but your second deal and your third deal. It’s just creating that environment where you, one, would be the first step, understand exactly what they’re looking for, because not every investment I have is going to be a good opportunity for them. And they’re going to appreciate when it’s not. If it’s something that is they’re looking for a short-term project and they're looking for a quick turnaround in capital, if we’re having a project that may have a lifespan of five to seven years, ultimately we’re probably not going to be the best fit for them now. It doesn't mean that we take them off our list, but we ultimately just want to make sure they’re fluent for what kind of investments we’re offering.

So it's based on an initial conversation, depending on where they come from. So if it's family, friends, or immediate network or if it’s someone who has made a referral from somebody else or if they’re local, we may set up a meeting. If they're not local, we may set up a call, and we’re going to ask them, specifically, what is their risk tolerance. What kind of investments are they currently invested in? What kind of investments are they interested in investing in? What has been their investing experience in the past? What have been opportunities that they have liked? What have been some of the success with those opportunities? So we can understand it, because investing in apartment buildings is generally a new concept for a lot of people. A lot of people don't know or did not know this was available to them. Or if they didn’t know about it, they thought it was only available to larger, institutional players. So you’re bringing this to them. It’s a brand new concept, so really the first step is just understanding what they're looking for or is it important to them for cash flow. Would they want the investments to be local? Would they want the investments to have a certain timeline in there? Are they okay with the investment being solely in passive investor? All of these are going to lead to us understand if this is going to be a working relationship where we could provide something of interest down the line. We do that at stage one. The second part is now talking about multifamily investments in entirety. Explain to them what we’re doing with this and why we’re doing it. It can go in two frames. If you have multifamily acquisitions that you’ve done in the past, then you could touch on those properties and touch on why you did and what you liked about them, how they’re going, how you’ve been performing the numbers, and if you take in a property full cycle, the full results. If you haven't, that's fine. You can talk about the industry, the class. You can talk about why you like these prototype investments, the five factors, cash flow, appreciation, depreciation, debt paid out and tax advantages. How that forms out to be a great investment. How you pooling resources from investors allows you all to benefit from economies scale to tackle these larger projects. If you have markets in mind, while you're talking specifically about those markets, if you’re in a Dallas or you’re in an Orlando or you’re in a Greensboro or Louisville, why you like those market dynamics. What you’re looking to do to expand yourself to have full knowledge to take on such an investment. Do you have other board members in place that are coming on that are going to part of your deal that have experience. Have you put yourself through rigorous training of some capacity, some CCIM training or other? Then after that — that would be step two.

Listen to full episode: https://lifebridgecapital.com/2019/09/ws337-setting-up-a-bright-future-through-profitable-investor-relations-with-jason-yarusi/

The third step would be that this is potentially either you could use, if you’ve done a number of these, show them a past deal and show them a representation of what the deal would be. But if you haven't done these, before our first deal happened, we created a mock deal, and the mock deal basically represented the kind of deal we were looking for and outlaid the type of returns we will be focused on, how the whole period would work, how the structure would be laid out for the investors. We went over the entire concept, so the investors were fluent with this. And that could happen over one or two conversations, because generally when someone’s received with a lot of information, if they don't have time to take it all in and just conceptualize it, the answer is only going to be no if you asked what they like, because it’s just too much to take on in one conversation. Then once we do that, we’ll give them the idea about what we’re looking to do and see if there’s general interest. Engage with their interest maybe. Do they have an amount they potentially may invest? What we find is that at that point, maybe it’s not right for them at that time, but we’ll keep them involved and let them know as we acquired a deal and keep them updated. Just because they weren’t ready at that that time, they may be ready the second deal, the third deal down the line. However, if they are ready, they’ve now given us an idea of what kind of investment they are looking to make potentially. Maybe it’s $50,000 or $100,000, and we’ll slot that down and say that this is no confirmation of capital. This is nothing that's guaranteed money, but this is now general interest that we've now created about telling them and ask them what they're looking for, telling them about what we're doing and what space we’re operating in, and tell them about the potential opportunities that we’re going to be looking for. So again, we don’t have a deal yet. We’re not even in that point of having that. But once you have a series of these conversations, you start really having an idea of how much capital may be ready for you, for your investors, however you’ve made the connection and you start to lay this out and start to build your groundwork with your investors. Now, it also makes you comfortable to the point where you can understand what type of product you can look for. So if you have the ability you feel potentially to, say, raise two million dollars and generally a good landscape would be total price, total acquisition. Maybe a third could be needed just in capital raise. So then if you can raise potentially two million dollars, then potentially you can look for a six-million-dollar acquisition. So then it makes you have that warm feeling inside, that you feel good that when you do go out there and now find a property and get it under contract, that now you have done the groundwork that you can go back to potential investors and now consider that you’ll be able to have a successful raise. Once you actually find that deal, you’re not going back to investors cold, and you're not going back to the point of saying you’re not trying to understand what they want and then you’re not trying to understand why you're doing this, and then you’re not trying to understand what the whole multifamily deal looks like. Then now, you’re trying to pitch them on a deal. That’s just too much, and it makes you look in need, instead of really what the ultimate goal is, how can we help the investors meet what is going to be their goal expectations for their life and their future and how can we work together. That is a much better scenario and how we like operate, so we’re now providing investments for people that we fully understand what may be the right investments for them. So when we do have the right investment. We can bring it to them, and it’s already a conversation we laid weeks, months, potential years before. Now it can be a very easy conversation, because remember the kind of opportunities we had we’ve been speaking about in the past. Here is that opportunity. We have this great deal. We like it for these reasons, just in line. We’re looking to hit these returns as we spoke about before. We’re looking for this deal structure as we spoke before. Would you still be potentially interested? At that point, it’s a lot cleaner of a conversation, a lot more beneficial of a conversation for everyone, going forward.

Listen to full episode: https://lifebridgecapital.com/2019/09/ws337-setting-up-a-bright-future-through-profitable-investor-relations-with-jason-yarusi/