The emergence of real estate crowdfunding platforms, like Fundrise, has completely altered the way real estate sponsors need to conduct business. No longer is capital raised from a closed group of friends and family investors, private real estate deals are now open to all accredited investors, and soon anyone with an Internet connection.
This Titanic shift creates a massive opportunity for best-in-class real estate sponsors with strong track records and access to quality deals to scale their investor base through crowdfunding. However, the most successful companies will do more than just bring good deals to the table, they will establish trust and loyalty with investors through transparency and exemplary service.
Here are seven ways real estate sponsors can build trust with investors to cultivate strong investor networks:
1. Provide Detailed Deal Memos: Investment memos range from high-level two-page overviews to detailed 20-page memos. When dealing with inherently skeptical investors, the more detail you can provide the better. You’re writing for non-real estate professionals, so don’t be overly esoteric. Instead, walk through the highlights of the opportunity, clearly detail the business plan and why you’re fit to execute it, show the various downside scenarios, run sensitivity analyses, and express risk clearly. If it’s a quality downside-protected deal with a solid story, investors will see that and respect your detail and transparency.
2. Make the Investing Process Painless: If you’re partnering with a crowdfunding site, make sure their platform facilitates seamless investment. Provide a detailed deal memo, allow investors to contribute funds and receive distributions through ACH, provide tax documents in a timely manner, etc. Being a passive investor means the investment process should be passive.
3. Great Quarterly Reporting: Many firms look at quarterly reporting as a tedious requirement, however it should be viewed as an opportunity to build trust with your investor base. Every touchpoint is an opportunity, so take it seriously. Provide ample detail, lots of photos, and prove to your investors that you are going above and beyond. This is your opportunity to highlight what a great job you’re doing.
4. Real-Time Insights & Transparency: Real estate is an emotional investment. Investors like the tangible nature of real estate and seeing the property up close. Tap into that emotion by giving investors what they want – we created this video to showcase progress on a new project for our investors.
5. Exclusive Investor Events: While the Internet makes it simple to connect with investors, there’s no substitute to meeting face-to-face. Rather than one-on-one meetings which may be too time-intensive, organize dinner or drinks in various cities where multiple investors live. Connect on a more personal level, introduce them to other investors, and allow them to get to know you.
6. Be Available: You should make each investor feel valued. If they email you with questions, get back in a timely fashion. If they call you and want to chat, make the time. It’s a privilege to have them as investors, don’t lose sight of that.
7. Do Good: All companies today have a social responsibility. As part of our ‘Atlas Cares’ program, we commit 1% of our corporate profits to select charities.
Although it’s early, crowdfunding is creating a unique opportunity for quality brand-conscious real estate firms to scale their investor base. Get creative and do things differently.
What are you doing to build your investor base?
Image Source: http://idwebtoko.com