In real estate investing, there’s no B2B, or B2C. It’s all H2H.
Humanizing your business is a very interesting and trending topic. You might even have heard some business leaders saying there is no B2B or B2C, only H2H (Human to Human). Real estate syndication is and will continue to be a relationship driven business where gaining the trust and goodwill of investors is part of the DNA of every successful real estate investment firm. Therefore putting emphasis on building stronger relationships with your investors and stakeholders can be a strategy that gives your firm a strong competitive advantage. So, thinking about your investor relations activities in the context of an H2H mentality is especially congruent for CRE investment companies.
In this guide, Ed Cravo, Cofounder and Head of Marketing at Groundbreaker covers 8 ways to strengthen those relationships by humanizing your real estate investor relations practices and making your investors comfortable throughout the life of the deal. You’ll learn how RE investment professionals must communicate with investors in a way that is personable and makes them feel human rather than just another “consumer.”
1- Let investors get to know you beyond your company.
Share your passions and convictions. People are investing in the manager more than the company.
It is important to understand that when your real estate investors are committing capital, they are not just investing in the deal, they are investing in you. Let them know what drives you and why that will make you and them successful in the deal at hand. As an IR professional you must have passion and vision as these can be the deciding factor over whether your investors trust you to make the right decisions at the right time. Nobody is fulfilled with disappointments, frustrations, conflicts, and surprises during the course of work. For these reasons, communicating your passion for your work can be a great way to strengthen your investor relationships. Passion brings out your maximum potential. In the world today, it is hard to feel passionate about your work. But, by sharing your passion with investors, not only will your full potential will be shown, but the energy is contagious and the investors will naturally be more confident in you and your abilities.
Get to know each other as people
There are many people today that still prefer to keep business and relationships separately. However, they can coexist and when dealing with investors it is vital that they do coexist. You don’t have to be best friends with your investors, but attempting to build a friendly relationship and connecting through interests outside of work, will bring the human element into your investor relations and that will make working together considerably more pleasant for you and your investors.
2- Get your investors involved
Real Estate investors want the deal to succeed as badly as the IR professionals, even if they are not active in the day to day operations. Investors are capable of providing valuable inputs based on their prior experiences in real estate and investing. So, enable them to share their thoughts and communicate that those thoughts are heard and valued.
One great way to enable your investors to be more involved is to schedule regular, but short conference calls. Bi-weekly during periods of high activity and monthly otherwise make for a good cadence. These conference calls will not only be informative to both parties, but are an open invitation for investors to share their thoughts and concerns.
3- Recognize investors’ value beyond capital
Investors bring significant value beyond the funds they are committing. As a real estate investment manager it is crucial to acknowledge this and help your investors feel as if their value is appreciated.
Acknowledge that you will be building a long standing relationship with them and that the investor at hand is someone you want to be doing business with. Getting to know potential investors and feeling there is a foundation to build off of will strengthen your relationship and align interests.
Give your investors an experience
Some syndicators send their LP investors a small but memorable gift as a token of their gratitude. But another idea is to let your investors in on the experience. Did you update the units? Snap a photo of the beautiful new laminate flooring and cabinets and send it to your investors, along with an update of how these upgrades will improve the property’s top line. Are tenants happy about the grab-n-go bagels and coffee you’re providing Friday mornings? Share a photo or tenant feedback with your LPs. Many of them will appreciate being brought along for the ride and will feel a greater sense of ownership within the partnership and a stronger connection with you.
Investors can be free consultants. More often than not they have prior experience in real estate deals. They will typically have some time throughout the day to chat on the phone and provide insight. There are many topics you can get their opinions on, such as the RE investment climate, regulation changes and ideas for improving the performance of a deal. There can be many other topics you can get into; think about topics that are often discussed internally and consider if they would make for appropriate casual conversations with your investors.
Finally, randomly calling an investor to just chat about what’s on your mind will go a long way to show your investors they are a valued part of your team.
…without an appropriate amount of communication, it is easy for investors to worry. Give some thought to how and when you’ll communicate and stick to a plan of consistency.
4- Communicate openly/honestly
Deals involving multiple people’s capital requires an immense amount of communication. The investors must be kept informed on the progress of the deal. Communicating openly and honestly not only earns you the trust of your investors, but the relationship will be much healthier in general.
Transparency is one of those topics where technology can really help. You can provide different levels of on-demand transparency and make it easy for your investors to self-service. You may opt for using a simple solution like Dropbox for sharing documents or going full service with an investor portal. In whichever case, make sure to consider how tools can help you give your investors seamless access to the information and documents they might ask for in a manner that pleasantly surprises them.
Do send text messages. Most professionals tend to shy away from SMS messaging. But it turns out that most people appreciate the convenience of receiving a text they can address on their own time. Not to mention, SMS is very effective at reaching your investors since they are read 98% of time. Often times, investors have multiple unread emails and may not see them for hours or days. Text messages will also help you develop a more personal relationship with your investors.
Worth mentioning again, hold short and periodic conference calls (see above).
Remember that without an appropriate amount of communication, it is easy for investors to worry. Give some thought to how and when you’ll communicate and stick to a plan of consistency.
Address concerns directly. It is key not to “beat around the bush.” When investors have concerns about the RE deal they are involved in, make your best attempt to address the concerns and figure out something together if need be. An even more effective strategy would be to address concerns before the investor even asks.
5- Personalize communication
Every IR professional has to deal with document distribution and sending out emails to their investors. It is easier to send out mass emails and basic documents. However, taking the extra time addressing each email to the individual and adding personalized snippets to reports (ie: brief paragraphs summarizing what the report is saying) will have all your investors feeling appreciated. However, you do want to optimize your time. Find that balance between personalization and automation. There are tools that can help, such as Doodle and GoToMeeting for online conferences. Mail Merge is another great tool that can be used for sending mass emails, while having the ability to send them out as if they are individual emails to different people.
6- Establish boundaries, expectations, and goals
One of the easiest and most effective steps to building a strong relationship with investors is setting expectations right from the start. It is essential that you and your real estate investors see eye to eye when it comes to the vision of the deal. Establishing clear expectations, and a vision from the beginning will provide multiple benefits. These benefits include; clarity between you and your investors, a baseline measurement for future performance of the deal, enhanced communication, and a way to hold everyone involved accountable if expectations are not met.
7- Develop conflict management skills
There is constant conflict when dealing with investors and real estate deals. Learning how to manage conflict between yourself and an investor or between anyone else will keep the relationship throughout the deal calm and intact. If you can disagree well and deal with each others opposing views, then everything can go smoothly.
Different strategies for improving conflict management skills include;
- Addressing the issue privately
- Determining which medium is most effective when dealing with conflicts
- Create an environment that has open communication, allowing everyone to have a say
- Repeat your understanding of the issue and see if the issue is something that needs to be handled or if it is all a misunderstanding.
- Follow-up with an e-mail or call closing out the conflict.
- For more tips and extensive details on conflict management, check out this article on effective conflict resolution strategies.
8- Celebrate together
Whenever a deal is successful, everyone should celebrate as a group. Take the opportunity to remind the investors know how important they are to the team and help them feel it. Highlight specific things your investors did for the deal that caused positive impacts.
Sharing fun times and wins will help investors gain more than just a return on their investment, and this good feeling can be the difference that brings in re-investments and forges long-term partnerships. Different ways that everyone can celebrate together include company and investor outings at fun events. Sure the typical reception at a popular restaurant and bar can do the trick, but thinking outside of the box can maximize the excitement that is associated with you and your firm. Think of Top Golf, go-kart racing, sushi making classes… The possibilities are endless!
You’re up: If you liked this article and think it can help your fellow IR professionals, we’d really appreciate the share.
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