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How to Get a Series of “Yeses” When Raising Money For Real Estate Deals

Michael Blank
3 min read
How to Get a Series of “Yeses” When Raising Money For Real Estate Deals

So you’re trying to raise money from private individuals to fund your next house flip or multifamily buy and hold? Good for you!

But make sure you get a series of “yeses” so you don’t strike out and exhaust your personal network prematurely.

The Mistake That Leads to Dead Ends

Many newbie syndicators make the mistake of trying to get a potential investor’s commitment to invest too early. I’ve seen too many eager syndicators approach their circle of influence like this:

“Hi, Frank! I’m getting into apartment building investing, and I’m looking for investors. The minimum investment is $25K, and you can get a 10%-15% return on your money. Are you interested?

The problem with this approach is that it’s too direct and will likely lead to a “no” that then becomes a dead-end. And you only have a finite number of people in your circle of influence. You don’t want a series of dead-ends; you want your circle of influence to introduce you to as many new people they know as possible.

You want to EXPAND your circle of influence.

mentor-mistakes

The Better Way to Get to a Series of “Yeses” to Expand Your Circle of Influence

Instead of going for the close early on, try to get introduced to as many people as possible. Focus less on the money-raising part and more on building new relationships.

Related: The One Simple Thing Required to Raise Unlimited Money From Private Investors

Here’s what this conversation might sound like when you speak with a friend or acquaintance:

“Hi Frank, I’m getting into apartment building investing. I think it’s really going to change the life of my family. Would you mind taking about five minutes so I can tell you more about it? I’d really like to hear your feedback!”

Your friend will probably reply, “Sure, whatcha got going on?”

Now you have your first “yes.”

You might continue, “It’s pretty cool. I’m looking for buildings with about 15 units, and I’m going to buy it with investors. The minimum investment is $25,000 per investor, and they’re getting a 10%-15% return per year on their money. They can invest with cash, of course, but also with their IRA or 401(k). Would you happen to know someone who might be interested in a five-minute phone call to talk about this more? [Even if you don’t think they have the money, they might know someone.] So at this point I’m just looking for anyone you think might be interested in taking a phone call with me.”

Your friend might say, “Yeah, I might be interested!” And BINGO, another yes.

Or he might say, “Well, my boss might be. He’s been talking about investing in real estate, and I think he bought a rental a little while ago.”

You: “That’s great. Would you feel comfortable in asking him if he’d be interested in a five-minute phone call with me?”

Friend: “Sure, I don’t think that would be a problem.”

Another yes.

Instead of asking for any kind of financial commitment, all you’re asking for is a five-minute phone call. Because they presumably know and trust you (at least to some degree), your friend or acquaintance will do you a favor of introducing you to someone else they know who might be interested.

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Related: How Do I Raise Money for My Deal? Considerations Investors Should Take Into Account

Even if they think that person doesn’t have any money.

Remember: you want to expand your network. That’s your priority.

Then you might ask your friend for another referral. As many as they can come up with.

Always follow these steps:

  • Don’t discriminate against anyone.
  • Talk to everyone.
  • Always ask for referrals.
  • Follow up with every referral.
  • And then ask every referral for other referrals.

If you follow this approach, your sphere of influence will ALWAYS keep growing. With persistence, you will eventually raise as much money as you want.

What has been experience in raising money?

Let us know about your struggles and successes with a comment!

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.