4 Non-Obvious Ways to Raise Private Money For Apartment Deals
As a real estate entrepreneur, both syndicating large apartment deals with investors and coaching others to do the same, I am always brainstorming new and unique ways to raise capital. While it’s important to confirm existing money raising methods to reinforce their validity, it’s even more important to seek out more effective ways in order to climb the real estate success ladder to go from outstanding to extraordinary.
Assuming you are equipped with the skills needed prior to raising private money for apartment deals, here are the 4 not-so-obvious methods to effectively raise capital.
Master the Art of the Phone Call
We get so caught up in emails and text messaging that we forget the art of the phone call.
For one of my earliest syndications, I had an investor that I knew was interested in my next deal. But, when the time came and I had the deal under contract, I emailed out the offering to my investor list, but this investor never responded. Rather than giving up and assuming he wasn’t interested, I picked up the phone and gave him a call. Good thing I did, because he decided to invest in that deal, and ended up investing BIG TIME in my future deals.
From this experience, I realized that there are a lot of different ways to receive and transmit communication, but different people prefer different methods. For example, I am very responsive to emails and I always pick up the phone, but I hate text messaging. Someone else may never respond to emails, but love to text. Therefore, it’s important to understand your target investor and their preferred method of communication. With the upper age range of my target investor being 65, I have found that phone calls have been the most effective method for bringing on and retaining investors and business partners.
Send Out Investor Qualifiers
Qualifying investors prior to finding a deal is great technique, especially if you are concerned about having investors tell you that they are interested in your next deal, but when the time comes, they end up backing out.
Have your investors fill out an investor qualifier document prior to bringing them a deal. This gets them involved early on by reading through something and writing down their information. It doesn’t have to get personal or require a bank statement. It just has them express that they are a qualified, accredited investor. While it’s not legally binding, it establishes more of a commitment level since they are signing some documents. I’ve found this to be an effective way of curbing the “yes I’m interested” but then backing out when the rubber meets the road.
Increase Your Responsiveness
My clients who are very effective at raising investor capital are outstanding at being responsive. My business partner is also very good at it. And I like to think that I am good at it too! One of the most important things for me in a business partner, whether it’s an investor or someone I am doing deals with, is to have an open line of communication and being able to talk to them very easily whenever it’s needed. And vice versa.
We are in an industry where things move quickly. There are a lot of distractions, but people expect to hear back from you ASAP, especially investors and business partners. At the very least, you need to set expectations on your responsiveness. This doesn’t mean you should be waking up in the middle of the night to respond to emails – unless that’s what you want to do. But if one of my investors, clients or business partners has a question, I am on top of it immediately.
I like to jump on things quickly and nip them in the butt before they turn into a monster. The worst thing that can happen is to let a tiny problem fester and grow into a behemoth. This is avoidable if you make the commitment to address all questions, problems, or concerns as soon as they happen.
Build Relationships as a Couple
When you build relationships with investors as a couple, it makes a huge difference because it adds another dimension. Ultimately, your goal is to build a friendship with your investors. So, if your significant other is getting to know their significant other and they become friends, that’s going to help from a long-term perspective.
Obviously, this is something that is really only relevant to those that have a relationship.
For everyone that has a significant other, I highly recommend building friendships through couple’s dinners, evenings out, or weekends away. It definitely adds a level of trust and credibility because they get to know you and your family on a personal level.
I have found this to be one of the most effective ways to get a ton of investor referrals
I know that at least one of this money raising tips – starting to use the phone more, sending out investor qualifiers, being quick to respond, and building relationships as a couple – were a surprise to you. And quite frankly, they were a surprise to me as well. I just uncovered these things when I was assessing what was working and what wasn’t working that wouldn’t be obvious from a money-raising standpoint.
What are some non-obvious ways that you have been able to increase your business’s efficiency, whether it be raising money, finding leads, locating deals, etc.?
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