Your ability to raise money can be very helpful in building your real estate business. Unfortunately, money-raising is not something that comes naturally to everyone. There is a fear factor involved that one must overcome in order to be able to speak to investors. Having a plan in place on how to speak to investors, what to say, and how to meet objections can help to significantly reduce the fear and anxiety.
How to Purchase Real Estate With No (or Low) Money!
One of the biggest struggles that many new investors have is in coming up with the money to purchase their first real estate properties. Well, BiggerPockets can help with that too. The Book on Investing in Real Estate with No (and Low) Money Down can give you the tools you need to get started in real estate, even if you don’t have tons of cash lying around.
How to Pitch to Investors
If you’re raising funds for your deals, you have to convince investors to give you their time and money. First, you have to get meetings with investors. You’re asking them to give you one of their most precious resources: their time. One of the easiest ways to accomplish this is at events and networking functions. Attending an investor networking meeting, for example, is a great place for you to connect with potential investor clients. Second, you have to get the investor to give you another resource: money. To accomplish both, you have to present your deal to them in just the right way.
Here are five tips to ensure that your presentation gets the response—and the funding—you want.
1. Open Strong
Within the first 30 seconds, investors need to understand precisely what your business does and why it’s a good opportunity for them. Make it clear and easy for investors to understand your deal. If you provide too much data and detailed information right out of the gate, they may not get it and may lose interest. If they like what you’re saying, they’ll let you keep talking.
2. Tell Stories
Think like a comedian and forget the PowerPoint. Raising money is about building and fostering relationships with your potential investors. Instead of endless slides about your market, your properties, and your business plan, start out with a personal story. Facts don’t inspire, but stories do. Tell the investors about what real estate investing has done for you and your financial security. Even the most analytical investor will be partly influenced by stories. In your story, relate to the audience with what type of fears you faced and what accomplishments you have made. This helps to engage your audience, establish trust, and also foster an emotional connection.
3. Highlight the Benefits
After you are done with your introduction story, you may consider using a PowerPoint to highlight the benefits of your deal. Your PowerPoint or slide presentation is a visual aid, not a teleprompter. Look investors in the eye to learn what about your proposal is resonating with them. Are they nodding or grimacing? Your slide presentation should make your physical and verbal presentation stronger, not detract or compete with it.
4. Make a Connection
Investors give money to people, not ideas. An investor will only give you money if they trust and like you. That’s why in Step 2 we spend the time to let the investors get to know us as people and not just focus on the deal itself. Develop trust by being genuine, building rapport, identifying commonalities (maybe you both went to the same college) and most of all—showing your passion for your investment. Take the time to make a connection with your potential investors as you walk them through your deal.
5. Sharing Results
It is important for investors to see results. If you have a track record of successful deals that you have undertaken in the past, this would be the time to highlight them. If this is your first deal, then be sure to find other areas where you can leverage other people’s results. Maybe you are in a market area where some big development company came in and built 800 more apartment units. Highlighting their success will help your investors to visualize the type of results you plan on providing.
If you are working with a coach or mentor, be sure to let your audience know. Leverage the knowledge of your advisory team when speaking to investors so they know you have the support team it takes to generate a safe and healthy return on their money.
Photo: Theophilos Papadopoulos