Here’s a hilarious pic I found online while I was up way too late searching for the most accurate financial algorithms for investor packages.
I also found a great article on my new favorite website: http://www.canadianbusiness.com which basically covers all things up and coming in Canadian business – including the best types of financial calculations sorted by the investment types. It occurred to me, while I was doing some research to complete my due diligence, that there are people out there who try to rely solely on the math to attract investors. While you may have a great deal with incredible numbers, you have to remember when you work with investors, you’ re not just selling a deal.
Quick side bar here: Have you seen the ridiculously low returns on 2012 hedge funds lately?
What Are You Selling a U.S. Real Estate Investor?
As a real estate professional, you’ve got to realize that people already have so much information available to them at their fingertips. From the MLS database to websites property listings, individuals have options. If you’re offering U.S. real estate ventures, realize that because you are in a niche market with a lucrative investment opportunity. Of course the numbers are going to be good. The real question you want to ask yourself is: what do you offer that goes above the ROI numbers? Your focus: good service.
What is Good Service?
I’ve found that most of my new business comes from, well, people I am or have worked with before directly and indirectly. Attracting investors can be an arduous task. It’s always well worth the effort to develop ways to retain your investors and build relationships. After all, real estate is a relationship business. Perhaps even more to the point, if you want to make moves and take advantage of real estate opportunities, you need a little capital to get you moving. You know the saying, ‘you’ve gotta spend money to make money’? You shouldn’t over-leverage yourself or your investors in this pursuit, your focus should be building solid business relationships that naturally attract new investors.
It’s All About Referrals
It’s really all about referrals when we talk about the instrumental value of relationship-building. If your attitude to customer service is all about closing the deal, that ‘wham-bam’ approach will destroy your reputation and you’re going to have to spend a lot of time trying to creatively build a buyers list. You have to realize that what you are offering is not ‘just the job’ you have been hired to do, you are also offering a good experience. Instead of trying to figure out clever ways to attract new investors, focus on those you do have, give good service consistently and excellent service when you can. Suddenly, you will find you start reeving new clients to join on your latest venture based solely on the reality of referrals.
Whenever you are engaged in business dealings, resist the urge to exceed expectations and merely impress upon someone your capacity – actually do it. Learn how to manage expectations with a can-do attitude and an ability to actually listen. Customer service surveys overwhelmingly demonstrate the value of consistent service. Do you know why? Because it is perceived as fantastically worse to be disappointed by inconsistency. The underlying determining factor in customer service relations is always going to be: expectations. Find out the investors priorities, tackle those first, maintain communication and take the time to actually make the experience enjoyable. Treat each investors as a person rather than a talking wallet.
Here’s a major secret tip I use to manage expectations: under-promise and over-deliver. For example, If you’re making a U.S. real estate property package, resist the urge to give on-par ROI projections. Sure, the ROI may be very close to those numbers, but if you want to give investors the WOW factor (referrals…) then you need to apply some understanding of basic human psychology. Instead, use conservative calculations, round your numbers to give you a slightly below expected profit margin and then happily surprise investors with MORE than you initially promised. To really be appreciated for going the extra mile, you have to keep the expectations at good service consistently and then awe and delight with a built-in practice of under-promise and over-deliver.
The best part is: people will be happy even if you don’t ‘over-deliver’ but just make good on your initial promising. So, if you do ever fall short of your bigger goals, you aren’t disappointing VIP investors – just yourself – but that’s a blog for another day.