JF1851: Working With Big Investors & Who Are Accredited Investors? #FollowAlongFriday with Joe and Theo
A couple of lessons coming at you today from Joe’s interviews for the podcast. We’ll hear his favorite two lessons he learned, which were from Bob Lachance (https://revaglobal.com/) and Shoshana Winter (https://www.iintoo.com/). If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!
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Joe Fairless: Best Ever listeners, how are you doing? Welcome to the best real estate investing advice ever show. I’m Joe Fairless, and this is the world’s longest-running daily real estate investing podcast, where we only talk about the best advice ever, we don’t get into any of that fluffy stuff.
We’ve got Theo Hicks with us. Theo, how are you doing, sir?
Theo Hicks: I’m doing great, Joe. How are you doing?
Joe Fairless: I’m doing well, just got done with the run, feeling good. Still sweating a little bit, but I showered, so I’m nice and clean for you. Looking forward to our conversation. We’ve got Follow Along Friday, and the purpose of Follow Along Friday is to talk about some things that I learned, or if you did the interviews the previous week, that you learned, and how it can help everyone hanging out with us today.
The focus of today’s conversation is gonna be about who are accredited investors, and really dissecting some information about how to think about accredited investors… Because it’s likely that, Best Ever listeners, you could benefit by bringing in more money partners into your deals, and accredited investors are the ones who have money to partner up with you. So we’re gonna talk a lot about who are accredited investors, and it is inspired by an interview that I did with Shoshana Winter, and we’ll talk about that.
First, a quick unrelated note to accredited investors, but more along the lines of just being helpful for anyone, regardless if you’re looking to partner with accredited investors – Bob Lachance; he is an active business owner and he has been a real estate investor since 2004. He’s actually an ex-professional hockey player. I really enjoyed my conversation with him. He seems like a great guy. Easy to smile, at least — I didn’t see him smile, because it’s only audio, but I could just tell he’s just an easygoing guy and he would be a cool guy to hang out with… But that’s not why I’m mentioning him. Why I’m mentioning him is when he was leaving professional hockey – he played overseas some, and he played professional for eight years; when he’s leaving professional hockey, he’s gotta create a new identity for himself, he’s gotta create a new profession, he’s gotta create a new way of making money and supporting himself and his loved ones… And he chose real estate.
The way he transitioned into real estate is he went to a real estate meetup group, and he asked everyone in the group who is the top shortsale investor in Connecticut (he lives in Connecticut). He asked a lot of people, because he wanted to get into shortsales; he’d done some research and wanted to do that… And they all mentioned one person. He then reached out to that person, and he said “Do you have any openings? Because I’d like to work for free.” Boom. And by doing that, he — of course, the gentleman (I think his name was Pat) said “Yes, I do have an opening. Here’s a list of people, and their addresses, here’s their script – go knock on some doors.” So he knocked on doors for almost one year, and that was his first job in real estate.
I mention that because there are a couple of things to take away from it, in my opinion. Maybe more, but a couple that stand out. One is when we’re transitioning into something new, it’s important to identify who is at the top of the game that you want to get into, and you identify that through word of mouth. Once you do that, then you go throw yourself into an opportunity where you can add value to their life. In this case, he offered to work for free. By offering to work for free, he was given an opportunity to actually make money by door-knocking; so he did not have to work for free, although I believe it was just commission-based… So you eat what you kill, so to speak.
But one, when we transition in something, identify who’s the top person through word of mouth, and then throw yourself in there and offer to work for free… That’s number two. And I’d say number three is, regardless of what that position is, just do it, and do it well and learn from it, and identify what you can take away from it that you can apply to future opportunities as you grow in the business… Because I’ve never — have I ever door-knocked? Not in a real estate capacity, I don’t think I have. Maybe as a young kid, but that’s completely different. So I’ll say I’ve never door-knocked before… And that’s gotta be terrifying. So props to him for taking a position that has got to be uncomfortable at minimum, and doing it for almost a year because he wanted to get into the business, and then off he went after that.
Theo Hicks: You never sold any candy bars or anything when you were a kid, and going door-to-door? And magazines?
Joe Fairless: I did, but I don’t count that, because kids are cute and people give them money just for sympathy, or they’re with their parents, or something… I’m sure I did, that’s why I kind of hesitated, but as an 18+ year old person, no, I haven’t door-knocked.
Theo Hicks: It’s definitely different. The cute factor is there for sure.
Joe Fairless: Yeah, yeah.
Theo Hicks: That’s interesting, and we’ve talked about it on this show before, how to work with someone who’s top in the industry… Obviously, offer to work for free; they happened to have an opening open for him to work for free, but… Just because someone says no if you ask them to work for free doesn’t mean you just stop. We’ve talked about this before – try to find a way to proactively add value, so do some research on them beforehand, figure out what they might possibly need help with, and then just do that for them…
And then when you reach out to them, introduce yourself, mention that you’re interested in working for them, and then use whatever this thing you did for them as evidence as to why you’d be someone worth bringing on. Sprinkle in there that you’ll work for free as well is also a good way, because I know, Joe, if someone came to you right now and offered to work for free, if you don’t have a job opening, you’d probably just say no. And if that person kept pushing, maybe they figure something out in their mind, that they thought would add value to you, and they did that, even it maybe didn’t, you would just see that they put forth that effort, and might be willing to give them a chance.
So I guess my point is that if you do follow this strategy and they say no, don’t just give up. You can go to the second-best person, but you should also continue to pursue the top person; you just have to think a little bit more outside the box, to figure out how to actually get in the door with them.
Joe Fairless: Excellent point. Thank you for bringing that up. It’s one thing to ask someone, “Hey, what can I do? I’d love to help you out.” And people do that. They send emails to me, or to the Contact Us page, and they ask “Hey, I’d love to work for free”, but it’s not free, because they’re looking for me to mentor them or help them along, and that’s my time, which is the most valuable thing, and it’s the most valuable thing for you and everyone else… So it’s the opposite of free, it’s actually the most costly thing out there. We only have so much time on Earth.
So by taking your advice, Theo, if they proactively create something, that helps me get an idea of the skillset they already have, and that they can bring to the table, and the value that they can add, and then I can start seeing them positioned within the structure of the company and how they could help, and then that gets my wheels turning. And I think you did that, right? Didn’t you do that?
Theo Hicks: It was a hybrid of that strategy. I was gonna add to that and say if they ask you to do something, don’t just do exactly what they said; do that, and then go above and beyond that is another strategy as well, besides proactively adding value. I think I did more of that than just doing something beforehand. Because you did have something you needed help with already. You said “Hey, Theo, I need help with this”, whereas this situation – this is someone proactively reaching out to you and saying “Hey Joe, do you need help with anything?”
And I was gonna mention it, but you already said it – you’ve gotta remember, if you’re reaching out to Joe, if you’re reaching out to, in this case, [unintelligible [00:09:40].05] you’ve gotta remember that they don’t know who you are, they don’t know what you’re good at. They have no idea if you are an MBA-level person, or a boots-on-the-ground level person… So as Joe mentioned, by proactively adding value and creating something for them, they can look at that and they can use that to determine what skillsets you have, and then begin thinking about how you could fit into their business. That’s also another benefit of doing that – they know what you can actually do.
Joe Fairless: Yes, thank you. I completely agree. The next thing that we wanna talk about – and this is related to what I’ve mentioned earlier – is who are accredited investors? This conversation is inspired by Shoshana Winter. She is a digital media veteran; she’s got 30 years of marketing management experience, and she’s at iintoo, based in New York City… And she said they have a database of 200,000 accredited investors. And it depends on what study you look at, but she mentions there are about 13 to 15 million accredited investors in the U.S. So there’s not a whole lot… I think there’s more than that, but regardless, there’s not a whole lot of people who are qualified as accredited investors.
So as a company that is partnering with accredited investors, it’s important to know who they are. And I think a lot of the times we go to the demographic information of accredited investors. They tend to be 45+ year-old, they live in business hubs like New York City, Dallas, Miami, those types of MSAs, versus Prosper, Texas, or some random area in Ohio. And the demographic information is important to know; what level of education do they have? Well, most of them have an undergraduate degree at a minimum. That’s important to know, but I think where it gets really interesting is when we look at the psychographic information.
She is coming at it from – as I’ve mentioned earlier, she’s got 30 years of marketing experience at companies in New York City, and working with companies that have achieved some pretty tremendous things… I think she said she worked at Audible before; I think Amazon owns Audible now, so before Amazon purchased Audible. I believe that, but I might be misquoting something right there… But you get the idea.
So with psychographic information, she said she took a look at their database and she said they tend to be more progressive thinkers, because syndications aren’t something that most accredited investors know about. And quite frankly, a lot of accredited investors don’t know the term “accredited investor”, so they don’t know what they have access to by being at a certain income level or a certain net worth level.
One of the things to think about is — when we talk about they tend to be a more progressive thinker, what does that mean? Well, it means that they tend to be more of an early adopter. They are using Uber. And again, I recognize that Uber isn’t something that only early adopters are using, because a lot of people are using it now, but in the early days they were one of the first ones using Uber, and they are more on the cutting edge of technology, or at least they try things out on the earlier stage, relative to the general public.
Now, anytime we’re talking about 13 to 15 million people, anything you say about 13 million people will not apply to all 13 to 15 million people. So if you are an accredited investor and you’re listening to this, and you’re like “I don’t use Uber” or “I’m not an early adopter”, I get that; I’m just talking more in generality, because that’s what Shoshana was talking about, just more general statements of them. Because I can tell you that from my experience, I haven’t looked at this, so I don’t have the exact statistic, but I’m gonna estimate that 90% of our accredited investors own real estate besides partnering with us. So they are people who already have experience doing these types of deals, so they’re more familiar with them and more comfortable with them. And the people who have not done any real estate outside of syndications – it’s a much different conversation than if they’ve done deals, even like a small investment property.
So thinking about from a psychographic standpoint how you position your company, know that they’ve likely done real estate deals in the past, they’re likely a progressive thinker, most likely more of an early adopter, it helps you create more relevant information for the investors. And then what you can do with that – and I have not done that; our company has not done what I’m about to say, but in the future we will… What we can do with that is we can segment our email list so that if they have invested in the last six months, then there’s a certain message.
If they have never invested in real estate at all, then we know it’s more of a long-term play with them, because we’ve gotta educate them about syndication, so we put them in a certain segment in the email list where it’s more of an education email series… Whereas if they’ve done multiple syndication deals, then it’s a different track of segmentation, so we have different messaging for them.
It’s just interesting to think about the different psychographic information and characteristics of investors, because then we can start segmenting our email list a certain way to really speak to each of the segments based on who they are and their experience, or their thought process, and their interests… And it’s a more relevant message to them, which leads to more business, for them and for us.
Theo Hicks: That’s a really good point. I’ve never even thought about that before. Obviously, you segment your email based on who’s investing in what deal, but not necessarily what type of information would resonate with them the most.
I see here you have “Have they invested recently or not?” That could be obviously one segment. But “Do they own real estate or do they not own real estate? How much do they know about real estate?” This is more personally, but one of the hardest things is figuring out how detailed to make the content; I’ll say a word that to me I know what it means, but maybe other people don’t know what that word means, so do I define it? Am I wasting people’s time who already know what that word means?
Now, if you break it up and just “Okay, these people have never done a deal before, so we’re gonna keep things very high-level, whereas these people have done 20 deals, they’ve invested in every single deal, so they need something more specific. Let’s dive into data, because that will be more relevant to them”, and then segmenting that out so you can send them each a different piece of content.
That’s actually a really good idea, that I hadn’t thought of before. That will be more valuable for them, for the reason I mentioned. It will likely result in more engagement in the emails, and increase the likelihood of them sharing it with people in their circle of influence.
Joe Fairless: And the key there is to have that information in the first place. That can be the challenging part. When you’re having initial conversations with your prospective investors, making sure that you’re collecting the right information, either in the conversation, and/or during the initial outreach form that the investor fills out, or however you’re doing it, but being intentional about collecting certain information.
For example, when I speak to prospective investors, in my notes – because I’m taking notes during our conversation – if they’re an entrepreneur, if they have any business at all outside of a W-2 job, then I’ll write in my notes “entrepreneur”, and then we have a snail mail newsletter called “The Best Ever Report”, that gets mailed to our accredited investors for Ashcroft Capital… And we profile one of our investors in that newsletter, and usually they’re entrepreneurs. So my team will search the notes and they’ll just search the word “entrepreneur”, and they’ll confirm that that person has invested with us – because we only profile people who have invested with us – and assuming they have, then they’ll be contacted to be highlighted in the newsletter.
So there are things that you wanna be intentional about doing when you’re getting to know your prospective investor, that way you can then use that information to then build a relationship with them even more by segmenting them in a certain email segment, and having more relevant information to them, or putting them in a report like we do.
Theo Hicks: Yeah, so one of the big takeaways here is that 1) when you’re actually talking to your investors upfront, make sure you’re asking the right questions, so you know about them. And then once you know about them, you can put them in their categories, so that when you are creating content, you can figure out which segment they should be in, so you’re sending them the correct, relevant information.
Alright, good stuff. Really quickly, trivia question – the first person to answer the trivia question correctly will receive a free copy of our first book. Last week’s question was “What large city has the most diverse economy?” This is based off of industry diversity, occupational diversity and worker class diversity, and surprisingly, the answer was Sacramento, California. And even more surprisingly, I think 4 of the top 10 were California too, which I personally did not expect. So if someone got that correctly, Sacramento, they will be getting a copy of the book.
This week’s question is “What U.S. city has had the most multifamily completions so far in 2019?” This was in a very recent study.
Joe Fairless: New York City.
Theo Hicks: Okay. So if you wanna answer this question, it’s either in the YouTube comments, if you’re watching this on video, or firstname.lastname@example.org if you’re listening to this on the podcast.
Joe Fairless: I’m pretty confident about that one.
Theo Hicks: Okay. And then the last thing is the free apartment syndication resource of the week. As you know, Best Ever listeners, we do Syndication School every Wednesday and Thursday; the focus is on the how-to’s of apartment syndications. For the majority of these series we offer free resources: PDFs, templates, PowerPoint presentations, something to help you scale your apartment syndication business… And we’re highlighting some of those documents on the Follow Along Friday.
This week’s document is from series 15, which is how to submit an offer on an apartment syndication deal. If you wanna listen to that series, it begins at 1716, and the free document for that series are four letter of intent templates. They’re actually examples that you’d have to copy and paste and add in your own personal information… But that [unintelligible [00:20:48].03] episode explain to you everything you need to know about creating a letter of intent, which is the non-binding agreement you send to a seller, with the intent to purchase their property with your purchase terms. If you want to download that, 1716, or in the show notes of Follow Along Friday.
Joe Fairless: And still have an attorney look over any type of legal document. Any template we ever share with you that would be considered a contract with a buyer or a seller, have an attorney look over it, just to be on the safe side.
I hope you enjoyed our conversation, got some value from it. We will tlak to you tomorrow.