How do you find great LP investors?
The best way to attract real estate investors is by asking for a referral from your existing real estate investors. Word of mouth is a more effective way to grow an LP investor base than conventional real estate marketing strategy. As the relationship with a new investor starts with a trust factor that you just have to maintain and grow, rather than starting from scratch.
Kim Lisa Taylor
My clients find passive real estate investors at a variety of events, including meetups, real estate training events, local chamber of commerce events, LinkedIn, and Facebook.
To find great LP investors, you first need to define a great LP investor. But that is a subjective term, so I will just give you my opinion. A great LP investor is one who trusts the operator enough to let them get the job done and does not try to insert themselves into every single situation. A great LP investor needs to know when to push and when to be truly passive and trust the operator with their hard-earned money. Now, how do you find these individuals? The first step is to define who your avatar investor is SPECIFICALLY for you.
If you are in the military, for example, maybe try connecting with wealthy veterans. For the second step, once you have your avatar investor in mind, set clear boundaries on what you will and will not tolerate. Do you want to raise capital? Of course, but at what cost to your values and your principles? Once you have a defined set of values, you can much more easily determine if an investor is worth your time and effort.
I would much rather work with a $50k passive investor that asks good questions at the start and trusts me to make them money than a $1M investor that emails and calls every day asking for the status of the property. Lastly, know the type of real estate investing criteria that you offer. For example, if you invest in multifamily properties with a 5+ year hold time and an 8%+ CoC return, you are not the right fit for someone looking for a short-term hedge and a 20% return. Keep the investor’s interests at heart, always.
The best way to attract real estate investors is to develop a consistent thought leadership platform that provides value to real estate investors. At Jake and Gino, one of the ways we achieve this is with our own podcast and being on others as well. This not only gives the brand personality, it also allows us to create true and lasting relationships with other real estate market leaders.
How do you delight your LP investors and get them to invest again?
Clarity, Consistency, Transparency, and Performance are keys to delighting and attracting real estate investors and retaining them as your investors for life.
Kim Lisa Taylor
Transparency and open communication are the keys to attracting real estate investors to invest again and again. Also, having a new deal when another is ending is also helpful.
Have integrity to your word. If you say you are going to offer a 10% CoC return, conservatively underwrite so that even if the worst-case scenario hits, you still can make the return hurdle. If you are uncertain about being able to refinance in two years, be honest about that and let the investors judge accordingly. Honesty will get you far in the real estate market.
Transparent communication rhythms in the real estate marketing strategy is THE key to delighting LPs. For that, we run monthly webinars in the first three months and then quarterly webinars thereafter. We also send monthly statements to provide trust and transparency in regard to their real estate investing portfolio, linked to collection reports to investors, providing them financial security. And lastly, we offer weekly office hours during COVID.
What are your three favorite tech tools that you rely on to grow your real estate investing business? How do you use them?
I like using a dedicated investor portal like Groundbreaker to manage my investor operations, Costar for the latest data and news pertinent to my deals, and mail automation software such as “Convertkit” to reach my real estate investors consistently.
Kim Lisa Taylor
I recommend that my real estate syndication clients consider subscribing to an investor management platform like Groundbreaker to keep track of their current and prospective real estate investors. For creating newsletters, drip systems, and tracking referrals, we like Active Campaign. We use Asana to keep track of projects and staff assignments.
I really enjoy using Slack, Monday.com and Insight Timer. Slack because it gives me a quick and all-inclusive way to manage communications between my team and even with real estate investors. Monday.com is a cool application to manage projects, teams, people, business, etc., and it is just a fun system to use. And Insight Timer because if I can’t work on myself, how can I work for others?
Active Campaign because of how easy it is to create a monthly newsletter using the provided blocks and templates. Asana to organize deals because it allows you to ensure that your main tasks are a lot more manageable and doable.
And Groundbreaker for real estate investor relations because it’s an innovative syndication software that is affordable while also having a team that cares for you and your business.
How to attract, manage, and engage real estate investors in a nutshell
A closer and more personalized relationship with prospects, always focusing on their core interests while also developing thought leadership, is the best way to attract real estate investors. Transparency and integrity are keys to engaging, retaining and attracting your investors, always remembering to keep them well-informed and up to date. Finally, the three things that you must have in your tech-stack are: activities, business, and investor relations management tools.
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