In real estate syndication, no decision is ever made in a vacuum. When an investor decides to close on a given property, for example, they are not just choosing to buy that property—they are choosing to buy that property instead of buying one of the many other similar properties that are currently available. All decisions are made, at least to some extent, with opportunity costs front of mind.
Deciding to invest or partner in a specific syndication is no different. There is a finite number of investors who hope to work with some sponsor, even if they are not entirely sure who this sponsor might be. When they do make a final decision and direct their finite capital resources towards a specific project, they are simultaneously rejecting many other alternatives.
While many people aspire to enter the lucrative syndication market, there are only some investors that are actually in a position to act. Conditions are likely even more competitive now that COVID-19 has affected our economy and has caused many wealthy individuals to become extremely risk-averse with their investments.
Knowing that quality investors are scarce, it becomes absolutely crucial for real estate sponsors to continue the search for the proverbial “diamond in the rough.” Without a continuous, data-driven, and targeted campaign, it is quite likely that your firm will end up losing opportunities to the countless alternatives.
In order to find the ideal investor, you will first need to begin by generating a detailed understanding of who, exactly, that person might be. What is this person’s current career and financial situation? What motivates them to make an investment? What are their fears, concerns, and challenges? What is this person’s background and where can you effectively communicate with them?
Answering these questions about your prospective investor can be challenging because, frankly, you have never actually met them. But generating a detailed profile – your ideal investor avatar – such as this can help you begin shrinking the pool of possibilities and narrow your search to individuals that are authentically qualified. Generating this profile needs to occur during the preliminary portions of your campaign because, ultimately, it will affect every decision you make along the way.
The decisions you make when generating a digital marketing campaign aren’t for you—they’re for your potential investors. While it can be very tempting to “fall in love with your business” and center the campaign on your personal tastes, it is important to remember that you are not marketing to yourself, but marketing to others. Every component of the campaign—the articles, the social media content, the e-mails, etc.—needs to be written with your end goal (convincing a targeted party to take a specific action) in mind.
Reading the room is something that anyone can do to improve the ways they communicate. Whether your relationships with prospective investors began online or in-person, you will only have one chance to make a first impression. Trust is one of the most difficult things to build in the syndication industry, which is why it is so crucial to know as much as you can about your immediate audience and speak to them in a specific way. Not only is trust extremely difficult to build, but trust is something that is also easily lost.
Projecting your message in a way that makes your firm seem professional, experienced, and trustworthy will help you begin earning the attention of just about any target audience. But from there, your message will need to be adjusted even further. Knowing which changes and tweaks need to be made will involve having a thorough understanding of the audience, along with a thorough understanding of what your business has to offer.
You know your target audience is concerned about maintaining revenue flows during a recession. Your messaging should all be crafted with this in mind.
You know the audience has a high net-worth but is unfamiliar with the broader syndication market. Again, this is something that your messaging needs to directly reflect.
The best way to answer questions from prospect investors is to answer them before they even need to be asked. You are not going to be able to simply attract investors without scrutiny; you are fighting an uphill battle, a race for capital with many other racers. With effective targeting and coordinated messaging, you will be able to remain ahead of these competitors and continue moving forward.
Ultimately, there are a finite number of tools that a firm seeking an investor will have at their disposal. Sure, they could also invest in better data or better tech, but the possible paths to success still remain finite. Information is, and will remain, your most powerful tool. To succeed, you must use the information at your disposal, generate an accurate profile, and tailor your campaign to address that specific profile.
While there will still be work that needs to be done, these initial steps will remain absolutely crucial.
Adam Gower Ph.D. is an authority in content marketing and online communications for the real estate industry. He has more than 30 years and $1.5 billion of transactional experience in commercial real estate finance and investment. Over the last five years he has built a digital marketing agency at GowerCrowd.com and advises clients on how to raise capital during good times and bad. To learn how to raise capital from high net worth investors online, watch Dr. Gower’s whiteboard workshop by clicking here.
Scott Royal Smith is an asset protection attorney and long-time real estate investor. He's on a mission to help fellow investors free their time, protect their assets, and create lasting wealth.
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