Critical strategies for attracting investors to your real estate development business
Key takeaways:
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Target investors interested in your niche
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Mine your network for prospects
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Reach out to investors globally
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Create detailed financial reports about your project
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Present yourself as lean and capital-efficient
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Show investors how you create value
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Hone your soft skills to improve pitching and selling
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Be enthusiastic to get investors excited about your project
U.S. real estate is one of the most sought-after investments in the world, but to tap into this capital as a real estate developer, you need a clear strategy for attracting investors. Real estate investments are almost always attractive to risk-averse investors, and the potential of high returns can lure investors to potentially risky projects as well. You know the investors are out there, but how do you attract them to your projects?
How can you edge out the competition and convince investors to back your ideas? Ultimately, you need a strategy that gets your project in front of the right people and convinces them to provide the backing your development needs to soar. The following content covers the most effective strategies real estate developers should use for attracting investors, and it explains the critical nature of supporting your pitch with high quality, detailed financial reports as well as with the soft skills to guide the process to success.
Identify target investors
There are millions of investors in the world, and to safeguard your resources, you need to get your pitch in front of the investors who are most likely to be interested in your project. Don’t waste time pitching to investors who aren’t looking for real estate investment opportunities in your niche.
Instead, spend some time thinking about your target investor. What types of projects do they usually get behind? Where do they look for new investment opportunities? How does your development add to their investment portfolio? Ask yourself questions like these as you develop a plan for attracting investors and tailor your pitch around your target investors’ needs.
Work your network
You don’t have to start from scratch — whether this is your first real estate development or your 100th project, leverage your personal and professional network to find people who are interested in investing. The people in your circle know that you work hard and understand the real estate industry. Their vote of confidence can be critical as they spread to word to their contacts about getting involved in your project.
Go global
Throw your net wide, and remember that there is global interest in the real estate market. Worth nearly $10 trillion, the global invest-grade real estate market is growing, and in 2019, U.S. real estate accounted for over 40% of the industry’s growth as well as over 40% of the overall industry share. Worldwide, investors are aware of this phenomenon, and to be successful, real estate developers may need to look beyond this country’s borders when attracting investors.
Leverage financial reports
Attracting investors requires a solid business plan backed by detailed financial reports. Be prepared to show investors your estimated outlays and inflows. Use scenario analysis to outline the potential growth of your project depending on different situations, and provide in-depth details about the strengths, weaknesses, opportunities, and threats (SWOT) of your development.
Look lean and capital-efficient
The financial reports you use for attracting investors paint a picture of your project, and ideally, you want your real estate development activities to look as attractive as possible. Investors don’t get excited about projects where companies are churning or running endlessly on a hamster wheel. They don’t want to pour their funds into companies that are constantly running out of money and needing to raise large sums regularly.
Instead, they want the reassurance that their capital injections can last for a significant amount of time. This requires financial reports that depict real estate developers as lean and capital efficient. Use financial reports to show potential investors that you can stretch a dollar but also that your project has staying power
Show value
Make sure that you create value for your investors. Show them how their investments are going to translate to value. Keep value creation at the heart of your enterprise by constantly reassessing your systems and processes and modifying them as needed.
Don’t be afraid to talk about your failures and how you have learned from them and used them to improve your approach to real estate development. Hiding past failures from investors may seem like a good idea, but counterintuitively, sharing past failures positions your company as nimble, continuously learning, and always ready to rise to challenges.
Hone your soft skills
Even if you’re soliciting investors from business entities, you’re still working with other people, and attracting investors is essentially selling your brand. You need to have great soft skills to be successful.
Pay attention to details, and position yourself so that you’re meeting the needs of potential investors and not the other way around. Listen to the concerns of prospective and current investors and be responsive to them. This positive approach can help you land the investor in front of you, but it also builds a reputation that makes you attractive to other investors.
Be excited about your project
No one wants to give their funds to someone who is lukewarm about their project. Excitement is contagious. When attracting investors, you need to show them that you are enthusiastic about your real estate development.
Get help attracting investors to your real estate development
You have to manage many of the above elements on your own, but to create a compelling pitch that will truly attract investors, you need the right financial reports, and that’s where the Franco Blueprint team comes in.
We provide financial services for companies, and we can help real estate developers get the numbers in order. To learn more, contact us and let us help you develop the financial reports you need for attracting investors to your project.