JF2447: Three Ways to Raise More Money From Passive Investors | Best of Best Ever with Theo Hicks

May 15, 2021 | Joe Fairless | 00:35:47

JF2447: Three Ways to Raise More Money From Passive Investors | Best of Best Ever with Theo Hicks

In today’s episode, three experts give us tips and secrets on how to raise more money from passive investors.

  • Chris Raleigh discusses setting yourself up for success raising money via crowdfunding.
  • Yakov Smart discusses the best practices to raise capital using unique approaches on LinkedIn.
  • Adam Adams shares advice on how to best position yourself, your deal, the specific real estate niche you invest in, to your passive investors.

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“Chris’s advice on how to set ourselves up for success and maximize the amount of money we can raise via crowdfunding. He talks about doing the right research on the crowdfunding website to make sure it’s a good fit.”


TRANSCRIPTION

Theo Hicks: Hello, Best Ever listeners, and welcome to the Best Real Estate Investing Advice Ever Show. I’m Theo Hicks and today, we’re going to be talking about three ways to raise more money from passive investors. We’ve got three new clips for you today. The first clip comes from Chris Raleigh. Chris Raleigh is going to teach us how to set ourselves up for success in order to maximize the amount of money we can raise via crowdfunding. So at some point, Chris says, we tap out of the amount of money we can raise from family and friends, and one approach is to transition into crowdfunding. So here’s how Chris says we should approach crowdfunding.

Chris Raleigh: So at some point during our investment careers, if we’re investing in real estate or whatever you’re investing in, you tend to run out of your own money. So that’s when we start to look for other sources of capital, and one of the ways to get capital is you can reach out to your friends and family members. But those wells run dry after a while as well. So then, you might want to look at a larger pool of investing.

So since around 2015, there have been a number of real estate and other equity crowdfunding platforms that have sprung out all over the country, and dealing with all sources of asset classes. So just looking at the real estate side, you have everything from people who want to raise money to do single-family fix and flips, you have more established investors syndications that are doing multifamily or large commercial office buildings, you have people that are doing notes, you have — in our case, who are doing agriculture. So pretty much any kind of asset class, any type of real estate, you can think about, there’s a real estate crowdfunding platform out there.

So if someone decides they want to raise money on one of these platforms, the first thing you need to do is a little bit of research and decide, “Okay, this is what I do. I’m a fixer/flipper, or I’m a wholesaler, whatever. Is there a platform that can help me put together a project and raise funds for that project?” So do some research, you’ll see that there’s literally dozens and dozens of platforms; some of them have different criteria for the investor, so the best thing to do is to reach out and say, “Hey, what’s your criteria for someone who wants to put together a syndicated project?” They’re going to provide you with a lot of guidance along the way, but just in general, there’s some things you need to put yourself in the right mindset, and the first thing is, what are investors looking for? So chances are if you’re raising money with a crowdfunding platform, you’ve probably invested yourself, so you kind of understand that. But four things that people are always thinking about before they write to someone they don’t know potentially a check is, “What is my risk here?” So identify your various types of risks.

People don’t like to lose money, first and foremost. What are my returns? Is the sponsor capable of producing the returns that he or she is promising? Is this project viable based on location, the timing, the plan, what they intend to do? And also what are potential tax benefits? How is it structured? How am I going to save money on capital gains or income? Am I  going to see various sorts of beneficial tax losses, that sorts of things?

And people are also looking for a connection. So in our case, we do farm projects. So people like being part of helping somebody raise something or grow something, produce, be part of the food system. And the same thing can be true with just about any other kind of real estate; it’s like, “Hey, I want to help this local community.” “I want to help this person bring jobs to this particular neighborhood,” that sort of thing.

The next thing you need to kind of dig into is looking at your numbers. The crowdfunding platforms are going to go into various types of due diligence; it might be as basic as “Just put up your listing on a platform and pay us and we’ll promote it to our investors”, to “We’re going to really dig into your sponsors background, we’re going to dig into the numbers, we’re going to dig into your track record, we’re going to dig into your structure.” It’s always easier to raise if you’ve already done it before. So before you come to a crowdfunding platform with, “Hey, I need to raise $5 million”, it’s probably best if you’ve put together a smaller sort of syndication on your own or with some other partners, or piggyback with someone who has done this before.

And you’ve got to have a team. Most people don’t want to invest with a single person because there’s risks there; so whether that team consists of your CPA and your attorney, that’s important. Or you know, other sort of business partners. But having a team is something that investors really look for.

So then it comes down to what does the crowdfunding platform want you to do? Sometimes they want to put your deals in front of particular investors that are qualified… And that comes into what sort of regulations you’re going to do. And this is kind of the beauty of crowdfunding platforms, and why I strongly recommend this; if you decide, hey, I just want to put together a real estate syndication on your own, the first thing you have to do is understand securities legislation, securities regulations. And there’s a number of different entities that are involved with that – the SEC, the IRS, FINRA, state security agencies… And there’s a whole new definition; you’re going to have to go out and hire a security attorney, and spend a lot of money upfront putting together your private placement documents and things like that. Whereas if you go straight with a crowdfunding platform, they’re going to do that for you, or they’re going to help you with that process.

And again, it varies from platform to platform. In our case, we actually have spent all that money upfront with our securities attorneys and we help our sponsors put together that thing, and it saves them a lot of money because we’re essentially amortizing the cost of putting together securities documents. But to me, the two biggest hurdles are getting over the regulatory learning curve and the second is getting out the pool of investors.

The beauty of crowdfunding platforms is that they have a built-in pool of investors and they’re jumping right into your offering, and it’s getting up in front of their eyes. Hopefully, if you have done all your homework and put together an appealing plan, you’ll be able to raise the money rather quickly.

Theo Hicks: Okay. And the next step was to determine what the investors are looking for. And you broke it into four different steps – the risk, the returns, the tax benefits, and then I think you said, the connections, or being helpful. Is the reason why they’re doing this is because ultimately this information has to be included on their offering posting, [uninteligible [00:06:51] have like four sections, FAQ type of thing? Or is this more “You need to know because these people are going to ask you questions about this, and if you can’t answer it, they’re not going to invest with you”?

Chris Raleigh: It’s a little of both. When they set up — we call it a listing. But when they set up your offering on their platform, there needs to be some way to distinguish it from all the other offerings. Most platforms are going to have multiple offerings running at the same time. So if you’re an apartment complex in Oklahoma City, that’s different than a commercial office building in South Florida, which is different than a fix and flip on the West Coast. So those basic facts need to be up there, and the crowdfunding platform’s going to tell you what they need; they may ask for a business plan or a pitch deck. And those things are similar, whether you’re raising money for a fix and flip or whether you’re doing a startup and you’re creating some sort of app or something; there are some platforms for those as well. So if you’re not necessarily a real estate person, but you want to raise money on crowdfunding platforms, there’s there’s also platforms for those startup types of companies.

And then the other part is you want to be able to just tell the investors what they’re getting, and as many details as possible that the crowdfunding platform asks for is important; and you will get questions. And once the raise is ongoing —that’s kind of the next piece—some platforms, they do it all for you, some want the investor to be more actively involved, some want you to do a webinar, depending on how big your offering is. We do a lot of webinars and they tend to work well with presenting some sort of tangibility with a deal… Because you can kind of see the numbers on a thing, but unless you hear the sponsors voice and you see, “Oh, this is a real person,” or “He’s got a real team” you have more confidence in trusting him with your money.

Theo Hicks: I did want to ask about the listings… So you kind of gave us a few examples, but is there any secret sauce that people can do to make their listing stand out compared to all the other listings that are on there? Or is it just doing what the crowdfunding platform wants you to do and just stopping at that?

Chris Raleigh: It really depends on what you’re trying to raise money for. In our case, our farms can be very unique. I tell people that if you’re kind of seeing one multifamily apartment complex syndication, you’ve seen them all. But with farms, you’ve seen one farm, you’ve seen one farm, because they’re very unique. And not only are we talking about different crop types in different locations, but different ways of growing things.

So if you’re on a real estate platform, people are looking for returns, but they’re looking for the track record. I know when I invest on a real estate crowdfunding platform, I have more confidence. Location is important in a specific marketplace; there’s some places I just won’t invest. But assuming you’re in one of the places that I’ll invest, I am generally for somebody who’s got an experienced track record, and that takes some time.

Theo Hicks: So there’s Chris’s advice on how to set ourselves up for success and maximize the amount of money we can raise via crowdfunding. He talks about doing the right research on the crowdfunding website to make sure it’s a good fit. He talked about the questions that your investors are likely going to be asking and that you should proactively address when you are creating your listing. So to hear more from Chris Raleigh, about raising money using a crowdfunding platform, check out his Episode 2287.

Break: [00:09:57] to [00:11:59]

Theo Hicks: The next clip comes from a conversation I had with Yakov Smart, and he has a very unique approach to raising capital using LinkedIn. So Yakov is going to go into a lot of detail on his step-by-step approach for raising money from high net worth individuals on LinkedIn. Here’s what Yakov had to say.

Yakov Smart: Let’s start with some really important frameworks, because I know there’s people listening who are already very active on LinkedIn and have already given it a shot in terms of attracting investors and marketing and are seeing some sort of results. And I know there’s people who probably have a LinkedIn profile and they haven’t really tapped into it for attracting investors and maybe haven’t even thought about tapping to LinkedIn for raising more capital. Or maybe there’s people who are transitioning from their day jobs and want to get into doing things like syndications and other real estate projects.

The very first thing to think about is to understand the power of that platform, right? Because what LinkedIn allows you to do – it allows you to reach high-level decision-makers directly. So whoever is an ideal investor for you, whether they need to be accredited or not, whatever that number is for you or you’re wanting people to invest in your projects, there’s a great chance you can reach that person directly on LinkedIn… Because the average household income of a LinkedIn user is $115,000; that’s an average household income. And when people work with us, they’re just blown away by how quickly when you know how to build a list on LinkedIn, literally, within a matter of minutes, you can have a hyper-targeted list of thousands of your ideal investors, whether those are local dentists, dentists nationally, international investors, people at family offices, other real estate entrepreneurs, attorneys, tech founders, people who are working as project managers and corporations who have 401(k)’s to invest, for example.

Pretty much any type of investor you can imagine, you can build a hyper-targeted list of these individuals and a hyper-targeted list of accredited investors if you’re working with or wanting to work with accredited investors only. And the great thing is this data is the best data in the world, it updates in real-time, and you have access to those lists of potential investors at your fingertips. And what’s also really neat about that is as opposed to going out and buying a list or paying a list broker thousands of dollars, this information is available in real-time. And a lot of it you can even get on the free LinkedIn search.

So the very first thing that people have to recognize and that they have to know how to do, is how to find and pinpoint their ideal investors on LinkedIn and build those lists. And that’s a really, really big thing. There’s a number of ways to do that.

But the other piece, the sort of the one-two punch where things really start coming together for you is in the messaging; and if there’s a secret sauce to these, the messaging is that. Because you have to understand the difference between meeting that potential investor at, let’s say, a conference or a networking event; versus LinkedIn, where if you’re having a conversation at a conference room or a networking event and they’re not that interested at first, most people will give you the time of day, and they don’t just run the other way and give you the cold shoulder; versus online, you’ve got a split second to get them to care. There’s a lot of noise out there, so you need to be able to build trust, you need to be able to stand out using your messaging and you need to understand the psychology of that ideal investor as well when coming up with your messaging on LinkedIn.

The upside here and the vision and the potential for you as a real estate entrepreneur who wants to raise more money and raise private capital using LinkedIn is you have the ability to consistently generate investor leads by having a system in place where quite literally with one press of a button, you have something that runs on autopilot, it’s 90% automated, where you’re generating high-quality investor leads day in and day out, staying within SEC compliance and constantly filling your calendar and building new relationships with potential investors. So it’s a tremendously powerful platform. I’ll also say it’s still one of the most underutilized platforms out there for generating high-quality investor leads.

There’s five ways to build a list on LinkedIn, okay? And this will be a really good, thorough answer to a question that I think a lot of people are asking themselves, that are listening to this. So five different ways to build a list on LinkedIn. First way is using the free search; it’s available to everyone. There’s a limit on searches you can do per month, but there’s some really good basics that you can segment for when you’re building your free list.

Second way is to search by LinkedIn groups. That’s also a free feature, that’s a way to see people based on behavior, based on interests. For example, if you want attorneys who are interested in real estate to begin with, which tends to be a much easier group than just attorneys in general, having that type of overlap is another good way to build lists, and finding people by groups is the second way to do searches. Third way, if you have a list that you could import of previous contacts, or if you’ve bought a list from somewhere, you can integrate that with LinkedIn. The fourth ways to use the LinkedIn advertising platform; at the time we’re having this conversation, it’s not worth it for most real estate entrepreneurs. LinkedIn ads tend to be more expensive and they’re not nearly what Facebook ads are at the moment; now, that may change.

The fifth way – and this is where the premium accounts come into play – is something called LinkedIn Sales Navigator. And inside of our programs, I highly recommend for people who want to really ramp this up and do this at scale and get consistent results, to use Sales Navigator. It’s not just the old-school LinkedIn premium account. There’s a few different types of premium accounts – there’s Recruiter, there’s Old School Premium and there’s Sales Navigator, and specifically, the upside of Sales Navigator is you can build hyper-segmented lists, there’s about 15-20 different filters you can filter by; you can save these lists and use them like a CRM inside of LinkedIn. And what you also have the ability to do is get hyper-specific; we’re talking about criteria like zip code, we’re talking about things like how long someone has been at their company, right?

So oftentimes, a good investor is someone who has a retirement account and has had that longevity; you can go by seniority in organization, you can go by different interests, different affiliations, as well. So all of that is available. And also by company sizes, where people live, for example; there’s an affluent zip code, you can build lists of those people as well.

And where it gets really, really powerful, is having the ability to do that and get hyper-specific; the more specific you are in Sales Navigator, the better. And the reason why this is such a big hack, Theo, is this tool was originally intended for B2B sales prospecting, and part of this new way of using LinkedIn that I think a lot of real estate entrepreneurs are drawn to, certainly when they work with us and why they’re drawn to a lot of our programs is we’ve taken a tool that’s very, very powerful, but it’s never been used quite like this, and there’s so much upside and potential to it.

The messaging is a really big thing. There’s three important places to have your messaging tuned. We could talk for hours about messaging, but I’ll give you sort of the essential to start with. So the first place, as some people could probably guess, is going to be that LinkedIn profile, okay? You don’t want it to sound like a resume; you’re not looking to put your executive bio out there. Your messaging on your LinkedIn profile needs to be all about what’s in it for them, because you’ve got to grab their attention first and gear it towards your ideal investor; the more specific you can be in your messaging on your LinkedIn profile, the easier it’s going to be to start building that trust. And you want that ideal investor when they look at your profile to look at it and think to themselves, “Wow, this is for me.” That’s a really big thing that you want to have happen.

There’s some other important areas of the profile where you can do that; there’s some of the tactical things with headlines, your About section, having a great cover photo, making sure your profile is set to public, those types of different things that are a really good place to showcase a lot of your messaging.

And the other reason why the LinkedIn profile is so important is because other than your website online – this will surprise a lot of people, but it’s really important – your LinkedIn profile is your most important online marketing asset, because when people Google your name, even if you haven’t logged into LinkedIn in years, that LinkedIn profile is usually going to be, at least on the first page, if not in the first three results. So it’s really important to have that updated, it’s really important to have powerful messaging on your profile.

The second place is in some of the content that you’re able to post on LinkedIn; just like Facebook, there’s a newsfeed on LinkedIn, and it’s using content when it comes to messaging; it’s not about volume, it’s not about posting five times a day. There’s a lot of gurus who talk about posting five times a day or whatever, and that’s an overwhelming amount; no one neds to do that. It’s more about posting quality things that educate people and get people to have an a-ha moment, like “Wait a minute, this is something I might want to learn more about.” There’s a number of best practices there, but as a rule of thumb, just think about content that moves people closer to action, that makes them more aware and makes them more educated about the type of investment opportunities that you have to offer.

Now, a real strong word of caution – when you post on LinkedIn, do not post individual deals. There’s a bunch of SEC compliance and regulations that you just don’t want to go there, right? So it’s never about individual deals, offering up individual investments just out in the open on LinkedIn. That’s not what I recommend at all, I want to make sure people do not do that.

The third important place for messaging is, you mentioned, Theo, direct messages, right? And the big mistake to avoid of direct messaging, you don’t want to go for the one-shot kill on something as nuanced as investing. You know, there’s some cases where people are going to write you checks for hundreds of thousands or millions of dollars over time, and to start that relationship off, you do not want to start off by connecting and pitching them immediately, right? It’s one of the worst things you can do and you can ruin someone who might have been interested by taking that sort of approach. So instead of doing that, we want to think about it as a series; I call it a LinkedIn messenger funnel. It’s a series of messages you can strategically send to someone on LinkedIn over time that’s going to get them to want to find out more about what you’re up to, about investing with you and it’s going to get them to want to schedule a call with you, and then eventually join your investor club and your investor list. So it’s a really powerful way to look at messaging.

Some other best practices – you want to keep things concise, you want to make sure that you’re always leading with value, you want to make sure sometimes that you’re asking the right questions that are going to get their wheel-spinning and are going to get them interested, and you want to make sure automating; this was your other point as well, sort of on the systems and automation. I’m big on delegating. I’m big on you as a real estate entrepreneur being the visionary behind your business and having a system where you can actually delegate.

First of all, you want to automate as much as possible, but you also want to have a system for generating investor leads on LinkedIn that you can actually delegate to an admin, an intern, an assistant, and the big thing is to have it be systematic in a way where they can plug into, right? Wherein that becomes mechanical, that becomes button-pushing.

So first the strategy in the messaging, in the processes and in the individual tactics that are going to work for you, then the mechanical and the day-to-day upkeep. Now, the great thing about the day-to-day upkeep – using different types of automation software, you can actually automate about 90% of the work, right? So once you have the messaging in place, your profile looks good, you’ve got a really good list, you can automate pretty much all the follow-up; and the only manual part – and this usually takes people between 15-20 minutes a day if they don’t have an assistant to do it on their behalf, is responding to people who are actually interested. You’re going to start to see inquiries, you’re going to start to see people who were interested in finding out more about investing with you, people engaging, asking questions and messages, and you’re going to either give yourself 15-20 minutes a day, which is usually time very well spent responding to actual leads, to people raising their hands wanting to know more, or eventually delegating that to an assistant or an admin person.

So you definitely want to tap into automation, automate 90% of the outreach and the follow-up. That’s a really big thing.

Theo Hicks: So Yakov went into detail on why we should be using LinkedIn to target high net worth individuals. He gave us the five different ways to build the hyper-targeted list. He went over the three important things to keep in mind when we are creating our messaging, and then he talked about how you can automate this process so that you’re only doing manual labor about 10% of the time. To hear more from Yakov, check out his episode, which is Episode 2250.

Theo Hicks: The third clip comes from Adam Adams, and he tells us a very fascinating story about a situation he was in where he needed to raise about a million dollars when the closing was in four days. So listen and hear how Adam was able to accomplish this.

Adam Adams: At the time, this was our second syndication; we did one syndication on a small, small property, 16 units in Connecticut. It took us about three weeks to raise $300,000. And then we got better at raising money. So on the second syndication that came up — I’m supposed to be the money raiser in my company, similar to you. So I’ve got a podcast and that’s supposed to be my role. And I had raised a couple of $100,000 in the first few days, and at the time, I didn’t really know that this was my role, so I went on vacation, literally. I went out of town and then I came back and I was like, “Hey, guys, how are we doing?” And they were like, “Oh, you know, we’re at 300k” and I’m like, “But we were at 300k before.” And they said, “Oh, yeah. Yeah, yeah.” So I said, “Well, I’m going to go out of town for another 10 days, I’ll be here next week. So let me teach you all what I would do to raise the other million.” So I taught everybody what to do and then I went on vacation with my girlfriend, had a great time at the Jazz Fest in New Orleans…

Break: [00:26:06].20] to [00:26:44].03]

Theo Hicks: And then in the last clip, Adam Adams taught us how to raise money when we are in a pinch, but also a lot of the advice he gave can be applied to raising money in general, especially when he broke down exactly how to speak and converse with someone in order to convert them into an investor.

Adam Adams: Came back after 10 days, and I was like, “Great, where are we?” And they said—

Joe Fairless: 300.

Adam Adams: We’re at 300. You know it. You know the story, Joe.

Joe Fairless: I saw that coming. I don’t know the story but I saw that coming.

Adam Adams: So everybody was talking about, “Okay, what are we going to do? How are we going to do this?” We had some motivation. They believed in me and I didn’t know what to do exactly, but I’ve always felt that we need to have a strong mindset. I’ve always felt that way. What’s his name? He just came on your podcast… He’s a friend of mine and for some reason, I can’t think of his name because I’m on the spot.

Joe Fairless: Because you’re friends with everyone.

Adam Adams: I try to be. I try to be, yes. So Tim Bratz was just recently on your podcast.

Joe Fairless: Yes.

Adam Adams: He had a similar situation where he had to raise a lot of money in a very short amount of time. It was all mindset; the power that he had was the power of saying, “I can’t fail, I just have to do this.” So you ask yourself, “How can I? How can I?” So I canceled all of my other appointments for the next few days, because we had four days to close. So I canceled everything. I remember calling everybody saying, “Can’t go to lunch with you anymore. Can’t talk to you on the phone anymore. Can’t do this with you. We have a great podcast interview coming up, but I’m going to have to postpone that for another couple of weeks, because I’ve got something that needs to happen.” So I locked myself in the room from about 10:00am to 6:00pm for four days in a row. And that’s where it starts out. People would walk into the room while I was in between calls and they were like, “We’re getting down to the wire.” I remember it was the day before we were supposed to close and we still needed 500k. Okay, so three days, made maybe about $500,000.

And this is all estimates, because I don’t have the specifics, but I remember thinking that I had about $500,000 more that needed to go in the bank tomorrow, so that we could close on time. And I had several investors that I was talking to on the phone say “What happens when you don’t close this?” And I was like, “We’re closing it.” And they’re like, “Yes, but what happens if you don’t close it?” And I just had to politely say, “We’re going to close it. I don’t have time to talk about there being a possibility of anything else. So I just got to respectfully let you go so I can keep making these phone calls.” And then I actually truthfully had two different of my partners walk into the office and they were like, “Hey, Adam, what happens if we don’t close?” And to them, I wasn’t as nice as I was with the passive.

Joe Fairless: Yeah. [laughs]

Adam Adams: I was like, “You can’t effin’ tell me that. You’ve got to get out of my office, and like, everybody in this office has to know that we’re going to close. We have to know that.”

And honestly, it was kind of crazy, because — this is totally true story. It’s just mind-boggling how down to the wire it was. So the day of, we still needed $250,000, and one of the 1031s that I think was 200k backed out.

Joe Fairless: Oh.

Adam Adams: So that put us at needing a ton more money. So I just kept calling. And when we get into the questions, I want to talk about kind of like the sales pitch that I used when I called people, because I do think it is beneficial for anybody out there. It’s not just the mindset and it’s not just the grind, but the psychology behind asking for money also needs to kind of come out in the interview today, so that we can really learn; not just that we need to have some tenacity and never quit. But the end result is literally and truthfully, the day that we were supposed to close, we got that last wire in about two hours before close. So my partner, DJ, ran to the bank, made our wire and just in time we barely, barely closed. And then the next day… And this is all just in — I don’t know if it’s really $10 million, I don’t think I’m exaggerating. I don’t think I’m lying or either way, but I never even wrote it down. But the very next day after we closed, that’s when I got all of these people call me and said, “Hey, we want in on that deal and I assume you didn’t close. So now we’re ready to get into it.” And I’m like, “It’s gone.” So again, this is not literal, but I feel like the very next day I had $10 million that wanted to go into it; I only needed one, which I guess helps a ton for the very next deal that we do. So ever since those days, raising money is a lot easier now, but I’ll give it back to you.

Joe Fairless: Well, let’s talk about what you said to the investors and then we’ll go from there.

Adam Adams: Okay, so this was 506 B, which is important to note that I had to know them already. I couldn’t advertise this; I had to have a prior relationship, which kind of painted me into a corner. And I was stressed, but I wasn’t willing to say anything else. So I thought, “I’ve got to only talk to people that I know and I’m running out of people that I know. This is hard.” So I started going back and I started to try to figure out, what could I say to change it? And I kind of took a page out of your book; something that you do naturally, I figured that I would have to also do. So I’m having to figure out a way to tell somebody who’s also a syndicator why it makes sense for them to give me their money… Because that’s all I had left, is other syndicators. So here’s the pitch and it worked like a miracle.

I would dial the phone, and when they said, “Hello,” I would just say— let’s see… I’d get one of their cards and I would say, “John, it’s been a while. I haven’t seen you since we were at the ultimate partnering event, or since we were at that sponsor event. I just wanted to touch base with you. How’s your syndication business going?” So that’s the first thing, just, “It’s been a while. How is your syndication business going?” Very, very, very important question. Because now you have to start to listen. And when listening, you have to start asking more questions. So they’re like, “Oh, yes, I haven’t been doing it lately, because it just got too hard and I had to go back to work” or whatever they said. Whatever they say, you really have to be intentionally open-minded to understanding more about that situation, whatever it is. “So how is your syndication going?” “Oh, it’s not.” “Okay. Well, what happened?”

And then you’ll get into a part of the conversation where it’s kind of like this. “Well, I know you have the money, I know that you have the drive for it, so what you’re telling me is that the reason you haven’t been successful is because it’s just been really tough to find a good deal. And the reason that it’s tough to find a deal is because you didn’t have the track record.” And then they usually answer yes. So when it comes down to that point, then you say, “Well, I’ve got a deal right now. Why don’t you just go the minimum in that deal—”

Joe Fairless: Which was?

 Adam Adams: 50k.

Joe Fairless: Okay.

Adam Adams: “Why don’t you just go the minimum in that deal, and that gives you the track record to have some more doors to your name, and then hopefully, the brokers will start taking you more seriously, just because you’re invested in a deal?” And it always got this, aha moment, for them where they’re like, “Huh, I never thought that it could be that easy to just get experience.”

So really diving deep into this question, people who are listening might have the thought process that it’s way easier than what I just told you. They might just assume that it’s super, super easy. All I have to do is say, “How’s your syndication business going?” and then I’ll be like, “Invest in my deal.” But you have to find a way to sit back and first ask enough questions. And here’s the analogy that I have for you is, if you walked into a doctor’s office and you said, “Hey, I’m not feeling well” and they just said, “Alright, we need to give you a cast for your ankle” that’s not a solution to your problem. They haven’t diagnosed you well enough yet.

So when somebody says, “Oh, you’ve got measles or the mumps” and you walk in and you’re like, “It’s just my nose hurts, so I just didn’t know what was going on”, they’re not solving your problem and that’s because they’re not asking enough questions first. So that has to be you. When you start by asking somebody, “How is your syndication business going?” and they start to answer, you really have to respond back and forth with a lot of dialogue. Okay, so you know how when the doctors, they say, “Does it hurt here? Does it hurt here?” They keep touching different places or they say, “What happens if I turn your neck like this?” And when they ask enough questions, they’re like, “I think I know where this pain point is.” And that’s you as the salesperson allowing people into your deal. You have to see what is it? Are they having trouble with brokers? Is it a different raeson? Maybe they’re saying — there’s so much that’s to it, but if you don’t understand how to ask all of these questions repetitively to draw out the real diagnosis, that’s when you’re going to fail. I don’t know exactly how to teach that 100%, but if you have questions for me, Joe, that might help bring that out, I would be happy to help. But the point is you have to ask enough questions to really understand what it is; because when you solve the problem, it needs to sound completely genuine. It needs to be completely genuine. “Well, I could help you by you being involved in my deal. You say you have a bunch of doctors, attorneys, whatever, and they’re waiting to get into your deal. Why don’t I put you into my deal, and you let all of your doctors and attorneys come in on this deal that we own together, you’re on the general partnership now; you know them personally, so that makes it legal by the definition of 506 B. And now I’ve solved your problem, you own the real estate, you’re on the deal, and your investors are going into your deal, so it solves their problem, too.” So that’s kind of what I’m trying to get out or help other people to understand.

Theo Hicks: So overall, the three ways to raise more money from passive investors is 1) from Chris Raleigh, how to set yourself up for success by raising money via crowdfunding, 2) the best practices to raise capital using the very unique approach on LinkedIn, and then 3) was Adam Adams, a great story about grit, and he also gave us some advice on how to convert someone you haven’t spoken with in a while to an investor.

So if you want to hear more about Adam Adam’s situation, check out his episode, episode 1509, “How to raise one million dollars in just four days in a crisis.”

Thank you for listening today. Have a best ever day, and we’ll talk to you tomorrow.

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