This is an important and attractive time to raise more capital to fund real estate deals. Investors are hungry for opportunity. Sponsors with access to deals can be of great service, while growing their own ventures.
It has become easier than ever to raise money from a wider range of investors online. Just make sure you know what it takes to be successful.
Six things to know before you start your next fundraising campaign…
1. Who You Really Want to Raise Capital From
Know who the best investors are for your raise. Accurately assess how many of these potential investors are out there. As well as how much market share you have the potential of realistically landing.
Who you plan to raise money from will dictate everything else. It will determine the projects you choose, tools you use to reach investors and follow up with them, how much you offer in returns, minimum amount of investment, the words you use, legal structure that is best to use, branding and marketing.
2. How You Will Deliver Trust & Convenience
In order to convert any potential capital investors they need to trust you and be able to enjoy a convenient process.
3. How You’ll Provide an Efficient Process
You’ll need an efficient system for connecting with investors, processing incoming capital, delivering excellent follow up, and providing valuable updates and timely distributions.
What tools and software will you use to make this happen, while protecting your time?
4. How Much it Will Cost to Raise the Money You Want
Real estate fundraising isn’t just a one way street. It can take time and money to raise capital. Ask for too little by not accurately calculating legal, payment processing and marketing costs means you won’t raise enough to complete the acquisition, improvements or leasing needed to perform on what you promised.
5. How Much You’ll Offer Investors in Return
How much yield will be attractive to your target investors? How much is sustainable in terms of returns? How can you structure your offering to under-promise and over-deliver, while remaining competitive?
6. How You’ll Balance & Manage Your Time
Fundraising can be time consuming. How will you balance every day business and delivering on returns with raising more capital? This can be a full time job for a whole team, unless you use great systems and tools to automate it.
This is a great time to be raising capital for real estate deals. Technology has certainly made it easier. Just make sure you’ve done your homework and are organized if you want to enjoy the process, get the results you hoped for and line yourself up for repeat business.