One widespread myth of commercial real estate investing is that you should start small, maybe flip or wholesale a few houses, own a few rentals or duplexes, all while using your own money to build up your assets to do bigger deals later. Many newbie apartment building investors mistakenly think that they need to use their own money to invest in multi-family properties. They say “I don’t have enough money and I don't know anyone with any money.”
This may very well be true, but don’t let that stop you! In this article I want to show you how to find investors who want to invest with you and in your commercial real estate deals.
The truth is that the people you already know either have money of their own or know someone who does. And worst case, even if those people aren’t interesting in investing with you, they can at least refer you to someone else they know.
The take-away from this article is that you should simply talk to everybody about your ambitions to invest in apartment buildings.
How should you go about doing this?
Make a list of your family, friends, neighbors and co-workers. Intentionally look for opportunities to say something like “I’m putting together a group of investors to purchase an apartment building. I expect returns to be between 10% and 15% per year. The minimum investment would be $50,000. Do you happen to know someone who might be interested in something like this?”
Your friend might be interested himself – great! But if not, he might be able to refer you to someone else. Then follow up diligently and keep your friend posted on progress. Always ask everyone for another referral. It’s surprising who the people the people you already know can introduce you to.
If you get interest from someone, schedule a meeting with that person. If you’re concerned about what to say in that meeting, read the article [LINK] which describes exactly what to do.
Here are some final tips:
- In your elevator pitch to potential investors, always mention the minimum investment amount. That way, if they accept your meeting, they’ve already expressed interest in investing at that amount and hopefully you’re not wasting your time with someone who doesn’t have the money to invest you’re looking for.
- Don’t judge a book by its cover. It’s really hard to tell who has money and who doesn’t. I spoke with “wealthy” people who had no interest or money to invest because they were busy making payments on their mansion and boats. On the other hand, “little old men” who look like they came directly from the 70’s and drive a 2001 Jetta turned out to have hundreds of thousands of dollars in their IRA accounts!
As a rule of thumb, just talk to EVERYONE you know or come in contact with. Practice your elevator pitch, mention it frequently, ask everyone for an introduction and follow up diligently. Soon, you’ll get one or two people who are interested in investing with you, which will boost your confidence. Keep it up and you’ll be amazed by how much money you can raise to invest in apartment buildings!