3 Tried & True Tips for Building Trust When Raising Funds for Deals


Whether you’re like I was when I started out raising capital, finding an investor to lend on one deal, or you’re managing a fund that does many deals, it’s important to build a strong and lasting relationship with your investor(s). Of course, when it comes to improving their experience, getting feedback from your investors is key. If you’re newer to raising capital, you can also consider your own experiences as investor, including what you may have liked or didn’t like about the experience.

For me, after being a fund manager for over 15 years (and investing for over 25), one of the things I’ve learned is the importance of not only knowing who my ideal customer is, but also knowing how best to serve their needs. Primarily, this consists of helping them feel more comfortable and confident with their investments, including the ones they have with me. As you might suspect, this can be easier said than done.

Here are a few tips and ideas I’ve come across over the years.

3 Tried & True Tips for Building Trust When Raising Funds for Deals

Communicate regularly.

Often, it comes down to the type and frequency of communication you have with your investors. There may not be a magic number that works for everyone, but it’s certainly something worth tracking. For example, we know how many communications a potential investor will receive on average before investing with us.

How professional does your organization appear to the public, and how fast do you respond to their needs? It usually makes sense to have a good online presence and to frequent the places your investors hang out, whether that’s through social media or even live events.

Related: How I Find Private Money Lenders to 100% Fund My Deals (& How You Can, Too)

Of course, it makes sense to stay in touch with your best clients on a frequent enough basis without annoying or spamming them. After all, retaining clients is just as important as finding new ones. Maybe this is through providing monthly statements, quarterly updates, yearly financials, or investor meet and greets. Or maybe you could send photos or videos of the status of the rehab projects they’re investing in. Either way, there are many great opportunities to show transparency and to build trust.

Another strategy is to find ways to provide more value to your investors. For example, we sit on the board of an accredited investor group, Strategic Investor Alliance, which not only creates a venue to network but also provides information and education for the investors. At these meetings, other alternative investment options are discussed, as well as tax saving strategies. We even go into various types of planning, including retirement, estate, legacy, and even family governance.


Protect their capital.

Whether you’re in the business of real estate notes or hard real estate, another area to consider is how well you protect your investors’ interests, especially when it comes to the actual paperwork. Do you go the extra mile to safeguard your investors’ capital?

I’ve seen some folks think that they’re slick by having the paperwork favor themselves over the investor, only for that to be uncovered by the investor and their counsel at a later date. I’m not sure how something like that would ever help to build a strong, long-term partnership with your investors. And so, I think it’s best to do the opposite, where you can show the investor(s) how you intend to protect them and their capital.

For example, instead of trying to borrow more money that the deal’s equity can cover, maybe you could cross collateralize and have two properties back the loan.

This can also be demonstrated in other ways, especially through corporate governance. Are you demonstrating that you have a group of professionals on your team? Maybe you have an investment committee approve all investments made. Or if you’re smaller, maybe you have a clear, concise business plan and model that you can demonstrate.

Also, are your contracts tight with everyone else you work with, including your attorneys, vendors, and contractors?

Another example of how you could ease your investors’ fears is by showing them that an adequate amount of renovation was completed before you request the next draw. Of course, it also looks good if you’re on time and sticking to the schedule and scope of work initially laid out.

Follow through.

It really comes down to do you do what you say you’re going to do? And do you convey the proper messaging to your investors?

When it comes to raising capital, having a long and solid track record is a game changer, but it’s still something you need to maintain. Whether you’re new, without a long track record, or you’re very experienced, the follow through is equally as important.


Related: Investors: Don’t Be Intimidated by Private Money! Here’s What You Need to Know.

For example, many investors start out small, and everything is going great. Then, they start to grow too fast, and you can see the wheels starting to fall off their little real estate investing machine.

Now, they could start sharing all of their problems online, asking for advice from their Facebook friends, but I’m not sure how professional that is.

Another option is to find ways to creatively solve those problems, maybe by building their team or developing systems and processes to support their growth while staying in frequent communication with their investors.

It’s much easier to look like a big shot when everything is going well, but it’s what you do when the chips are down that really counts. As Warren Buffet says, “You’ll see who’s swimming naked when the tide goes out.”

So, let me ask you on BP how do you protect your real estate investors’ money?

Let me know your thoughts with a comment.

About Author

Dave Van Horn

Dave Van Horn is President at PPR The Note Co. - an operating entity that manages several funds that buy/sell/hold residential mortgages, both performing and delinquent. Dave has been in the Real Estate business for 25 years, starting out as a Realtor and contractor and moving onto everything from fix and flips to Raising Private Money.


    • Dave Van Horn

      Hi Chukwudi,

      Thanks for chiming in! The first major issue? I guess I would have to say that the first issue I faced was that I didn’t know enough accredited investors or high net-worth individuals since I came from a blue collar background. Networking was really the cure for that. It was also something that took time, persistence, and a good reputation but in the end, it definitely helped mend the issue.

      Also once I became accredited, that seemed to open up a lot of doors to meeting other investors as I did investments only opened to the accredited. Through theses I met other like minded people in a similar situation.


  1. Nice one, Dave. Do you have a specific time frame for keeping that communication up that has worked best? Just wondering if you’ve tried quarterlies, monthly, etc and found one that seems to work best for both parties.

    • Dave Van Horn

      Hey Tim,

      Good question. At my company now, we have a name for our communication program with investors. It’s called the Customer for Life program. So it never ends! Hopefully haha.

      We’ve tried different variations of communication time tables over the years and found that monthly seems to work best for our audience. We also do special quarterly and yearly touches and events as well. In terms of announcements and follow up, a lot of it is automated at this point so it gets easier the more you know your audience and investor process. We also did live Q&A’s but they got too big to handle. Now we have live investor Q&A Conference calls that can hold 1,000 people.

      Hope this info helps


  2. Dave’s article is right on point. You need to develop trust from the outset throughout the offering process and in the offering memorandum and other materials that you use. But for too many issuers, the process stops after they receive the investor’s money. That is a mistake as this is the point where the communication needs to increase and become more regular. The companies that understand this process and build these relationships usually have the most success in fundraising activities.

    • Dave Van Horn

      All great points Craig.

      Building personal relationships and trust through communication is key and doesn’t stop when an investor decides to give you their money. Our communication increases post-investment rather than pre-investment. Also gifting programs and other investor benefits tied into our core values help as well with investor retention. I believe the old saying that your best customer is your current one. So it never hurts to stay in touch.


  3. Brandon Sturgill

    Dave, how did you structure your deals when you were starting to raise private money?…did you do JV’s…or members in an LLC?…Can you talk to the mechanics more?…

    How did your investors contribute funds?…wire to escrow at a title company?…did you set up a draw schedule?…were you doing rehabs when you started or holding properties?…How did you handle returns?…what type of note did you structure (1st lien and deed of trust?…) Did you have deals in contract before seeking funding?…


    • Dave Van Horn

      Hi Brandon,

      All good questions. To answer your 1st, I just utilized a note and mortgage that I ran through a title company. I was a partner in a title company, which made it easier. I did not do JV’s because it was never worth giving up a piece of the deal, private capital is only worth interest rate and points in my opinion. Now I had members of an LLC but at that point it was just immediate family.

      So when I was starting out, there was no equity it was just debt – which didn’t usually require draw schedules since I knew everyone. Later on in my career for larger real estate projects (Mobile Home Parks, storage centers, etc) that changed. Today I require a draw schedule when I lend money.

      As for the type of properties it was both buy and holds and rehabs, structured as short term commercial 1st mortgage rehab loans. I’m not sure I completely understand what you mean when you say “handle returns”? I will say as a lender I’m usually lending at 13-18% and as a borrower I’m closer to 10-15%.

      And lastly, I always had deals under contract before seeking funding. I think it’s a necessity in most cases.

      Hope this info helped. If you click my name at the top of the article, you can see all of my previous articles. I’ve written quite a bit about raising private money in the past, so it may be worth checking out.


Leave A Reply

Pair a profile with your post!

Create a Free Account


Log In Here