This is the fourth 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. Episode 317, we explored the different types of deal structures you could offer investors.
Last week we discussed where your future investor partners are currently hanging out.
In this episode, let’s explore the WHEN…when you start finding potential investors for your self storage deal. And at what part of the deal is the best time to start the conversation with investors?
My Opinion Has Changed
When I first got into self storage in the late 1990s, I would gain control of a deal, put my marketing materials together (we will discuss the material in the HOW episode), then set up my appointments.
In most cases today, this doesn’t work.
This doesn’t work because the due diligence periods are so short today for existing self storage. You need to have a pool of vetted investors who have raised their hands and said they are interested in your deals.
Even then, you will be pushing fast to get everyone on board in the due diligence time frames of today.
Back when I had 60 or 90 days to get everything done, that was one thing. But today, with the usual 30 day time periods, I am hustling to get my due diligence completed on the project, leaving very little time for fundraising.
Sometimes, you have lots of time during the due diligence to fundraise on new construction or conversions, but certainly not when buying existing facilities.
So, what does one do?
Well, for starters, recognize you are actually in two different businesses. One is self storage, and the other is fundraising.
As you may gather from the previous three episodes, fundraising is an entirely separate endeavor in itself.
If you are using other people’s money, you are not just raising money from deal-to-deal. You are always in the fundraising business.
That is your job now.
A fundraiser.
So, if that is your job, what would you do?
Well, I will tell you what I did.
I began to establish myself as an expert on self storage.
You are reading this series, viewing my videos, taking the Bootcamp, coaching, reaching out to other self storage trainers, and learning how to analyze self storage are all part of the training you use to establish yourself as an expert.
I also learned and leaned upon industry statistics. When I did my first deal, I had no past operating expense numbers to quote or history of value-add plays I had done, so I used industry statistics I got from the Self Storage Almanac.
I knew them and could use them in a conversation.
Do you know what the legal definition of an “expert” is?
In legal terms, like an expert witness in a case, an “expert” is defined as the person who knows the most about a given subject in the courtroom.
I decided to be the “expert” about self storage in the potential investor circles I hung out in.
I would do differently today than I did when I got seriously going in fundraising.
What I did was write a book.
That is great, but today you don’t need to do that.
First of all, what I would do today is create a website.
I would create a portal for investors.
In that site, before I launched it, I would write a series of “blogs” or episodes (like these at CreatingWealthThroughSelfStorage.com) that discuss self storage, why it is a good investment, where you focus in the industry (i.e., like value add plays, etc.), and what is currently going on in the industry.
Much like I do with you as small investors getting in the self storage business. However, your focus will be on people who have already made their money and want to invest it somewhere.
Last week we discussed where these people are currently hanging out. So, I would go there and listen to what they are asking, then address it in the material I would post on the site.
Then as people go to your site, it is easy to see who and create emails to go them periodically updating potential deals you are looking at, and when you actually get control of a self storage opportunity, it would not be a surprise for them to hear from you.
I would have business cards with this site on it, and I would try to get every potential investor I talk to to go to this site and register so they could see deals as they come up.
I doubt if you would get much push back from anyone because potential investors are always looking for good deals.
The goal here is to keep new material going into the site so people have a reason to come back.
I do weekly (in most cases) episodes on this site. Whatever your schedule is, try to stick to it as much as possible. This will also inform your potential investors you can be counted on and are reliable without you having to say a word about it.
Websites
Now you may say, I have no more idea how to create a good website and post episodes on it than I know how to create a reusable rocket.
Well, I don’t either.
Fortunately, you don’t have to. There are a lot of easy solutions out there. What I did was go to a site like Upwok.com, post for a website builder describing the site I wanted to create, and people from all over the world send me competitive bids to create the site.
Then I used the same site to find someone who could run the site. Many of you have met Jonathan at the Bootcamps. He is the real brains of this operation. I just sit down and write out an episode on my computer with all the mistakes I always make, and he turns it into what you see on CreatignWealthThroughSelfStorage.com.
These Virtual Assistants are very affordable and make life easy, so you can focus on what you want to say to your potential investors.
And you want to say it consistently, often, and as interestingly as possible. Let your personality come out.
Then when you have a deal to present and get commitments on, many of your future investor partners already know about you, your philosophy, and a trust has started forming.
The real secret to know here is that investors think they are investing in self storage. But what they are actually doing is investing in you.
Let them know who you are, what you are up to in self storage, and why you would be someone they should trust.
Start early and often to tell them.
In a perfect world, when the actual deal becomes ready, they already know you.
It doesn’t always work that way for every investor, but it can for many.
So WHEN do you start your fundraising?
Now.
