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After you have completed your initial outreach, attracted new leads and nurtured them in a way that aligns with your investment strategy (as covered in Part I), it’s time to move onto step four: communicating to influence investors. My top strategies for this step aren’t high-pressure “closing tactics” that frequently result in major buyer’s remorse later down the road. In fact, most popularized strategies outlined in sales books are not applicable here, nor are they how we conduct our business.
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Heed this advice, and clients won’t feel pressured to invest, but rather compelled. The closing call is, first and foremost, an opportunity for you to answer any due diligence questions and communicate benefits of the offering before you accept the commitment. With the following four components you can systematize that process.
Prizing
Before jumping on a closing call, remember that the biggest deal-killer is approaching the transaction from a place of neediness. If you believe you “need” the investor’s capital to complete the deal, you’ll lose significant credibility. This sets up the conversation to fail and, when viewed from the correct lens, is entirely inaccurate.
Rather than take that approach, remember that lucrative real estate deals are extremely hard to find. In other words, if you have access to a quality deal, investors should be the ones chasing you. There are literally trillions of dollars in the global economy, waiting for a deal like yours. In fact, trillions of dollars are invested into bonds that have negative interest rates, simply because investors need a place to put their money.
The concept is known as “prizing,” and is detailed further in Pitch Anything by Oren Klaff. Go into your closing call with this top of mind, and it will significantly help your odds of getting a deal funded.
Setting The Call Schedule
Once you have the potential investor on the phone, make sure to establish a schedule, including the end time. This sets goals, dictates the pace and, most importantly, assures them that you respect their time.
Here’s an example of an initial exchange:
“Hi, [First Name]. I’m glad we were able to connect today. Is now still a good time? Great. I wanted to answer any questions you have about our current offering. I have us blocked from now until 2:30 p.m. PT. If you have your list of questions in front of you, I’m happy to jump right in.”
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Before getting to the nitty-gritty, I like to confirm that now is genuinely a good time. If they made a mistake, double booked their time, forgot or are unprepared, I would much rather reschedule than force the conversation. This also reduces any high-pressure aspects of the call.
Keeping Language Conservative
Keep in mind that there is a significant difference between transactional sales, such as buying a car, and sales in the real estate investments sector. Once a transactional sale is complete, the buyer is (to varying degrees) out of the picture. With real estate, you are usually selling them interest in a partnership for the next five to 10 years. Because of this, it is critical that you ensure the potential buyer clearly understands the opportunity, and that their expectations about potential ROIs are conservative and attainable. One of the ways to accomplish this is to keep projections conservative, even if it makes the deal look less desirable.
For example, here’s how I might answer a question about our estimated timeline horizon for an offering:
“We own a nearby property with a similar profile to the subject property that has an expense ratio of about 45%, but our projections show a 48% expense ratio, in an effort to be conservative.”
This paints the picture that you are more focused on the long-term relationship with the investors, rather than inflating the returns just to get the deal funded.
Accepting Capital Commitments
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In order to receive a commitment, you are going to have to ask for an investment amount. If you have followed the steps outlined in Part I, this will be much easier than it seems.
The keys to this stage are to:
• Establish scarcity of the investment’s availability.
• Communicate commitment and funding deadlines.
• Accept verbal commitment.
Here is an example of how an investment commitment may sound:
“Does that answer all your questions? As far as next steps, we take verbal commitments upfront and then send out the legal documents once the property is about to close. Like I mentioned, it is likely that the opportunity will be oversubscribed before the 1/20/20 deadline, due to the levels of interest we have already received. Would you like to reserve an investment amount?”
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“Yes.”
“Do you know what the amount would be, so I can block it for you?”
“Fifty thousand dollars.”
“I’ll go ahead and block that now, with a follow-up email to confirm your reservation. The legal documents will go out next week. I know investments like these require a significant amount of trust, and I sincerely appreciate it.”
It doesn’t go that easily every time, but you shouldn’t have to force your potential investor into a close — nor do you want to. If you get this far in the process and meet resistance, it is not because you didn’t deliver your closing pitch well enough. It is likely that you needed a stronger lead nurture system that built enough trust prior to the call.
If this happens, tighten up the lead nurture process and get more comfortable answering due diligence questions on the phone. You will quickly learn what works, what doesn’t and what can help you raise more capital going forward.
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This process only works if you try it. So, get out there and send out those initial emails, write an e-book, set up a drip campaign and schedule some calls.