The key to success with closing a big multifamily deal for most people is going to be forming partnerships with other investors. Why? Unless an investor is prepared to pay cash for a property, they are going to have to raise the funds for that property from their connections to make the deal happen.
In our last article we discussed a variety of options that you can use for financing a deal including traditional mortgage loans and crowding funding.
One of our favorite methods of financing a deal is finding other investors who can provide the private funds which will be needed to fund the deal.
Although funding a multifamily deal with private funds sounds easy, the reality is that it takes the right elements to make it all come together including:
- A fantastic multifamily deal that you’re excited to talk about and the deal must be under contract.
- An awesome network or Rolodex of people who you know would be interested in investing with you or a large network of associates with the right connections who can introduce you to the right people.
- The right system will enable you to communicate with your contacts and effectively get the word out to quickly and effectively promote your deal.
Utilize Online Tools to Connect with Multifamily Potential Investors
Thanks to the internet, we have a wide variety of options for connecting with other investors who made be interested in investing in a multifamily deal.
Some of the resources that we can use for connecting with other investors include LinkedIn.com because on this website you can “leverage” your professional connection to get introductions with other investors who would be potentially interested in investing in your multifamily deal.
You can also start using Facebook Ads or Google Ads to build an email list of investors and you can also use programs like MailChimp or Aweber to manage your list and email your subscribers information about the deal that you interested in in partnering with investors on.
Connecting with investors and forming partnerships isn’t something that’s going to happen overnight but the good news is that when you utilize online tools, especially websites like Craigslist or Bigger Pockets to connect with other investors, you will be successful.
If you were to use free websites like Bigger Pockets or LinkedIn for connecting with investors it may take longer to connect with the investors compared to advertising with sites like Facebook or Google. The good news about online advertising is that it isn’t expensive at all. Some sites like Bing, for example, will offer you a credit of $100 when you’re getting started after you spend your first $25, so it’s very easy to get started with online advertising very affordably.
Tips for Raising Capital
Once you’ve started to build a list of investors, the next step is to start promoting your multifamily deal to them. Obviously, the most important part of promoting a multifamily deal to an investor is believing strongly in the deal that you’ve invested your own funds already and have some “skin in the game”.
When an investor sees that you’ve literally “put your money where your mouth is”, they will be more inclined to listen to you
Let’s say that you’ve raised private funds for the deal, keep in mind that those funds should be paid back first. This is how most investors pay back investors when they are raising funds for their first deals and it’s essential that you let potential new investors know that you have a preferred method of repayment before they choose to invest their money in your deal.
Finding potentially qualified investors is a key to raising private funds for a multifamily deal but so is earning an investor’s trust. This is vital because if an investor doesn’t feel like they really “know” you as an investor, they are going to be less inclined to invest with you so you should take the time to build and establish trust when connecting with investors.
Consistently Build Your List of Investors Each Month
The key to success in any form of sales is to A, B, C (Always, Be, Closing) and to do this you’re going to always have new investors who are coming into your list and interested in deals that you have in your sales pipeline.
How do you keep building your list of investors? First, you have to set a goal for how many new people that you want to add to your list each month and form partnerships.
As we mentioned earlier in this article, it’s possible for you to easily add new investors to your list by advertising on Facebook, Google or Bing. If you don’t want to spend money on ads you should be focusing on adding new investors to your list through networking on sites like Bigger Pockets or LinkedIn.
A good goal to have is adding a minimum of 10-20 new investors to your list each month either through digital marketing or online networking. If you stick with this minimum number, it will be easier for you to get to know new investors that you add to your list instead of having them see you as just another marketer that’s going to be emailing them on a regular basis.
How to Promote Your Deal?
Let’s say that you have a list of investors and a variety of professional contacts online and in the local area that you want to start talking with about your deal. The key to success with promoting the deal is to make sure that you’ve taken the time to establish a relationship with each contact so that they feel like they know you then once you have this relationship you should create a script and use the same pitch with each of your contacts.
Hello (Name), the reason why I’m contacting you today is I’m looking at investing in a big multifamily property in the Dallas, Texas area. I wanted to see if you might be interested in learning more about investing in this property, especially if it would create a healthy rate of return for you.
This 36-unit apartment complex is under contract for $15 million but it’s worth $20 million or more after raising rents!
If you invest a minimum of $270,000, you’re going to get a great base rate plus equity sweetener!
To learn more about this opportunity contact me ASAP at (000) 000-0000, or reply to this email.
Sticking with the same script every time will make your life easier because it’s going to keep you from making mistakes and altering your pitch from one investor to the next.
When an investor follows up with you and expresses an interest in your deal, you should follow up with them by sending the investor a longer document that has all of the information that they need to make an informed decision on the deal.
Remember that building a list of investors and establishing partnerships with them is something that you’re going to have to start now rather than waiting until later.
Always set a goal for the number of investors that you want to add to your list each month and take the time to form a personal connection with each person on your list because this will help investors to see you as someone that they trust instead of just another marketer.