You want to do your first multi-million dollar commercial real estate deal, but you don’t have the track record. What can you do? In this article I’ll give you some tips to build credibility quickly and appear bigger than you really are.
The challenge when you’re trying to get into commercial real estate investing for the first time is that you don’t have a track record. As a result, you’re not taken seriously by sellers, brokers, investors, and other professionals to get your first deal done.
It’s a chicken and egg problem.
The challenge is partly real but mostly perceived. What I mean by that is that while you can’t make up a track record, here are 5 tips to appear to be more experienced than you really are.
How to Build Credibility to Make Your First Big Commercial Real Estate Deal
Tip #1: Learn The Lingo
If your goal is to purchase your first 25-unit apartment building, then the first thing you should do is educate yourself. Learn to speak the language that apartment building investors speak. Read books, look at deals, meet other investors, and speak to brokers.
Nothing screams “newbie” more than using the wrong language.
Tip #2: Bring Your Business Cards
Common sense, but most investors don’t have any. Don’t be that investor.
Tip #3: Create a Website
Even fewer investors have a website. The truth is that many people perceive someone as more credible if they have a web presence.
Creating a website is so easy these days that you can create one yourself. And if you can’t, it’s cheap enough to pay someone to do it.
Tip #4: Flaunt Your Team
Network like crazy and identify who you want on your team. You’ll need a real estate attorney, possibly an SEC attorney if you’re raising money, a CPA, and property manager. Also recruit a group of experienced investors who can form an advisory board.
Add the names and bios of your chosen team members to your Credibility Kit (that we’ll discuss in a moment) and mention them frequently whenever you interact with people.
Having a team around you not only helps you overcome your lack of experience, it also makes you seem bigger than you really are.
Tip #5: Prepare a Credibility Kit
The purpose of the Credibility Kit is to provide you with instant credibility whenever you meet a seller, investor, or other professional. It consists of 3 parts:
- Cover Letter: A one page letter that introduces you, highlights your accomplishments and outlines your goals.
- Resume: A one page overview of what you’ve done. Even though you may not have a track record in apartment buildings, you want to highlight a track record of success in whatever else you have done.
- Sample Deal Package: This is an investor package of an actual deal that you may have received from a broker. Everything is real EXCEPT that you don’t have it under contract. It contains an executive summary, financial projections, and actual financials. If you have investors in the deal, it would outline the terms of the investment. Include the bios of the team you’ve recruited in Tip #4.
As you meet with investors or other professionals, you can use the Sample Deal Package in lieu of an actual deal you have under contract. This allows you to get financial commitments from potential investors long before you actually have a deal.
It also gives you tremendous credibility if you can show someone that you know what you’re doing.
For more information about the Sample Deal Package, see “Psst … The # 1 Secret to Raising Money to Invest in Apartment Buildings.”
If you’re just getting started with real estate investing, and especially if you want to start doing bigger deals, not having a track record can really hold you back. But by learning the lingo, creating a team around you, looking professional with business cards and a web site, and armed with a Sample Deal Package, you can overcome a lot of these challenges by appearing bigger and more professional than you really are.
Try it and see what happens. I think you’ll be amazed by how serious people will take you despite your lack of experience.
How did you first get started with bigger deals? What helped you overcome the “newbie” stigma?