Whether you are a real estate sponsor conducting business and raising capital from your private network of investors (such as family, friends, and colleagues) or you are looking to crowdfunding platforms through the use of the World Wide Web, the one thing that you need to do is establish trust and loyalty with your real estate sponsors. This is the best way to cultivate a strong relationship and network. Here are four tips to help you get started down the right path:
Tip #1: Offer a Detailed Memo of the Real Estate Deal.
An investment memo can be a couple of pages, or it can be two dozen pages. It all depends on how much information there is to provide to your investors and how detailed you want to be. However, the one thing that many sponsors tend to forget is that they need to keep the investor in mind. There are skeptical investors out there that will want more information. In these cases, the more information that you can provide, the better off everyone will be.
So, when creating a detailed memo, focus on the key points of the opportunity, detail your business plan and why you are the best fit for it, run sensitivity analyses, and demonstrate risk. If you have a solid story to back up your risk, investors are going to understand and respect the transparency.
Tip #2: Make It Easy to Invest.
Many real estate sponsors are just so eager to get investors that they don't focus too hard on making the investing process easy for investors. So make sure you spend some time on this. If you are going to partner with a crowdfunding site, do some research to ensure that their platform has a seamless investment. When providing your investors with information, give them a detailed memo for the deal, allow them to contribute their funds via ACH, and provide them their tax documents promptly.
Tip #3: Provide Investors with Exclusive Events.
You can always connect with your investors via the internet, but sometimes it is important to meet with them face-to-face. You can conduct one-on-one meetings, but you may also want to consider holding a larger event and bringing all of your investors together so that they can socialize with one another and get to know you on a more personal level.
Tip #4: Make Sure You're Available.
While you don't necessarily have to be available 24 hours a day, 7 days a week, it is important to ensure your investors feel that they are valued. After all, they are giving you their money. So when they call you, take the call and make the time to chat. When they e-mail you, make sure to respond in a timely manner.Share