This is the third in a series of episodes exploring the world of raising investment capital for those of you wanting to use other people’s money to get in and grow your self storage business.
In Episode 316, we had a quick look into who “investors” are, what they usually have their attention on, and the difference between investors and partners you may need. Last week, we explored the different types of deal structures you could possibly offer investors.
In this episode, let’s explore the WHERE…where you may find potential investors for your self storage deals.
Nothing gave me pause like this idea. Where in the world will I find people to put money into my deals.
I am not a big fan of using family and friends for your first deal. If at all possible, my recommendation is to avoid this.
If they beg to get in a deal after you have established yourself, perhaps. But, out of the gate, unless you have lots of other real estate experience, I don’t usually recommend this. If you have lots of real estate experience, I doubt if you will either.
Certainly, there may be exceptions, and I have seen them, but nothing screws a personal relationship up like money. I don’t want my Thanksgiving meals taken up with our business dealings.
Just my opinion.
So where do you find people, if not your friends and family?
When I did my first deal in 1999, I went to everyone I knew who I even thought had any money to invest.
I had most clients as a real estate agent, other real estate agents, accountant, lawyer, etc.
I can’t remember the exact numbers, but I think I raised around $350,000 and had thirteen different investors. I was taking investments as low as $20,000.
But I raised it.
I must have made fifty presentations (most likely not, but it seemed like it).
Organizations
Now I know many of you are saying it was easy for you because you were in real estate.
I know that because I have heard it a lot.
Well, consider it wasn’t.
Yes, it may have been easier for me than, let’s say, a factory worker at Ford Motor Company, but it takes something.
When we get into the HOW Episode, we will give more details on what you may say, but there is a real art to this part of the business.
The first thing I would do is join organizations and meet-ups where potential investors hang out. In-person and digitally.
I am no expert and raising money online. There is a lot of good training on YouTube and other places that can support you.
I am going to discuss your local area.
I joined our city’s “Investor Club” and the real estate exchange group. I have found partners and investors in both.
You could join the apartment association in your area. Usually, multifamily investors hang out there. There is a lot of movement from apartments to self storage in the investor world.
The point here is to be where potential investors are.
I would also recommend you listen a lot. See what they have their attention on. What kind of questions do they ask. I learned a lot about what and how I present potential deals, from listing to the questions they would ask other people.
Remember, you are offering self storage. When your turn comes around, you have a better story than anyone they will hear. Yes, it may not be as sexy and exciting as investing in an internet startup or a 500 unit brand new Class A apartments deal, but in most cases, your self storage deal will be safer, steadier in cash flow, recession-resistant, and overall, a reliable investment.
If there are no organizations in your town, go to the closest town that has them, and do it online. Again, there are more competent trainers than me for that piece of your connecting with investors.
Professionals
I would also make sure you present any potential deals (and I would wait until you have a very specific deal you are raising money on) to your CPA or accountant, your lawyer, insurance agent, and any other professional service you use currently.
I housed it as I want you to know about this so you can refer any other clients you may have that you think this could work for. I have seen them get interested in deals, and I have had limited, but some investors reach out to me from these meetings.
But what you are also doing is establishing yourself as a self storage deal maker. After a few successful deals, my experience is these guys start reaching out to you.
Conclusion
This has been a brief, but in my opinion, accurate, look at where your first investors may be at the moment and how to find them.
We will also discuss HOW to talk to them, and we explored last week WHAT to offer them.
But get this is an ongoing thing. If you use other people’s money, you are always in the fundraising business. Join online and in-person organizations now, even if you don’t have a specific deal.
Watch, learn, listen, and participate.
My experience is that when someone invests in my deals, then the deal performs like or better than the investor expected; they tell their friends. In the next deal, not only is the original investor in, but their friends want in as well.
People like investing in deals where people they like and respect are investing. I have seen this over and over again.
So, the real art is to do your first deal and have it work well.
And again, you are in self storage. You will have the absolute best story out there for investors to consider.
So at the very least, before next week’s episode, come up with three places you think you can go check out where potential investors may be as well as a list of people you can reach out to in the near future to discuss self storage investing.
