4 Principles to Source Capital from High Net-Worth Individuals and Find Off-Market Deals
The conference was unique in that I asked each attendee to submit the answer to the following question: What are current obstacles you are trying to overcome in your real estate business?Rather than create a conference the way I wanted to, I created it around the personal obstacles of each individual attendee.
After read over one hundred submissions, the common thread I found between everyone’s obstacle was two-fold: raising investment capital and finding more off-market real estate deals.
In keeping with the personalized theme of the conference, I formed my keynote address so that at its conclusion, all attendees would have practical takeaways for how to raise money and find off-market real estate deals.
Here are the four tactics I provided:
1 – Build Your Network
The most important thing that we can do to play the long game in real estate investing is to build a network. I have found that the best way to do this (and what I attribute to the majority of my success) is to create a thought leadership platform.
A thought leadership platform can come to life in one of four ways: 1) a podcast, 2) a YouTube channel, 3) a blog, and 4) an in-person event.
The keys to having a successful thought leadership platform or network are:
Consistency – For example, I host the world’s longest running daily real estate investing podcast.
Identify what your unique angle will be – I have two clients with military background. One was in the Army and the other was in the Air Force. They created a lease-option business and YouTube channel called “Joint Ops.” Due to launching this brand, they now raise over $200,000 a month in private money.
Start within Your Sphere of Influence – When you are starting a thought leadership platform, you are not going to get instant results from people who don’t know you. However, your sphere of influence that already exists will begin to know what you are doing and you will start to become the thought leaders within that sphere. It takes a lot of time and consistency to get strangers into your sphere, but you’ll get instantaneous results from people who already know you (i.e. friends, family, work colleagues, etc.). That’s how I raised $1 million for my first deal.
Tie into a Large Distribution Channel – Don’t recreate the wheel. Leverage an existing channel with a large network. For example, with a YouTube channel, you have access to millions of potential viewers. With a podcast, you can tap into the billions of ears on iTunes. With a blog, post to your own website, but also to BiggerPockets, LinkedIn, Medium.com, and social media to begin to create a following. With a meet-up, it’s a little trickier. However, someone in my network moved to Atlanta, partnered up with an existing meet-up host, and had 90 investors at his first meet-up!
2 – Ask Better Questions
Whenever I have a meeting with a client, I always ask them to tell me what is the best thing that’s happened to them since the last time we spoke. For some of my newer clients, their response will be, “oh, not that bad.” While that may seem innocuous, when we dissect it, what are they saying? They aren’t saying things are good, that’s for sure.
We have to be very careful with our language. Even though they are saying they aren’t bad, they are still using the word bad, a negative word. As far as I’m concerned, this puts us in the wrong mindset. The same applies to the questions we ask. When I was reading through the obstacles of the attendees of the conference, I read things like, “What happens if I raise money, but I don’t find a deal?” or “What happens if a deal doesn’t work out?” or “What happens if I can’t raise the money.” Instead, we have to ask better questions that don’t assume we are going to fail. Re-frame the question to “how do people who are great at raising investment capital and finding deals successful?” Model them, stick with them, and grow together.
3 – Create Opportunities
To find deals in a hot market, we have to be creative and create our own opportunities. Read here for an example of how I was able to find an off-market real estate deal while touring an on-market deal and added both to my portfolio.
4 – Partner Up
When I was a solo investor, I purchase four single-family homes and one large apartment building, and then my business remained stagnant for a few years. Once I partnered up with someone who complements my strengths and helps me with my weakness, my growth skyrocketed; I was able to added over $100 million worth of properties to my portfolio.
To find the perfect partner like I did, it’s important to know yourself. It takes a little bit of time and experience, but after completing a few deals, look in the mirror and ask yourself, “What am I really good at and what am I really bad at?”
Build a team around those answers and once you do that, your business is going to flourish.
Personally, after my first syndication deal, I realized I was great at raising investment capital and marketing, but I was terrible at underwriting and asset management. My partner has an institutional background, so he is phenomenal at the underwriting and asset management. Therefore, we complemented each other perfectly, which is why we’ve been able to scale so quickly.
In order to raise more money and find more off-market real estate deals, you must:
- Build your network through a thought leadership platform
- Re-frame your mind and ask better questions
- Create opportunities rather than wait for opportunities
- Partner up with someone who complements your strengths and weaknesses