Approaching wealthy people as potential investors for your real estate business takes some thought and planning. You don’t want to come off as a “pushy salesman” or someone that only care about people because they have money. You also don’t want to break any regulations or securities laws and I’ll tell you flat that in that area you need specialized advice (and it ain’t me, because I’m a marketing consultant not an attorney).
Approaching wealthy people and presenting your investment opportunity to them legally is kind of like, if you were a guy who was attempting to attract women into your life. You wouldn’t want to just walk up to attractive women (our comparison in this analogy to wealthy potential investors) and say, “I’d like to sleep with you, what do you say?” Likewise, you don’t want to go to rich people and say “Give me 100,000 dollars to invest for you, cool daddio?” Would you get a one in a couple hundred response? Sure. You probably could. How do I know that? That’s neither here nor there. However, what you can do is much better than that, and you will have a much higher percentage of people responding to you favorably– not beginning to walk the other way when they see you coming down the hall.
Please remember that I’m a marketing consultant. I’m not here to give you all the legal pieces because I don’t know them. Other people do that for my own businesses, and I’m very thankful that they keep our activities on the right side of the law and out of the ignorant masses who try to do this and oftentimes, break the law without even knowing they’re doing it. Again, this is marketing advice not legal advice.
That being said, the first thing I would do when approaching wealthy people as potential investors for a real estate business would be to have several elevator pitches already designed and in mind for the types of people that you’re likely to run into.
Secondly, you’d want to tailor your conversations toward the individual each time. If you have a previous relationship with them, if you’ve already talked to them, if you’ve already bumped into them, if you’ve exchanged chit chat with them about their job, keep a file on particulars and information you know about them. It’s not Machiavellian; it’s smart marketing and salesmanship to know these things.
If these are people that can put $100,000 into your pocket or into one of your deals, would it not make sense to know: their childrens’ names, where they live, what type of hobby they have, that they’re interested in fishing, that they are a University of Georgia fan, that they grew up in Harlem and now they’re proud of the fact that they’re a first-generation white-collar worker, or anything similar? Sure it would.
These things are important to know about people that you want to approach and ask for money, because they are important things you want to know about ANYONE you’re looking to connect with at a higher level in your business (or even in making friends for that matter).
What is it that they do for a living? Are they a CPA? Are you going to appeal to the CPA the same way that you would a doctor? No. So you gotta know those things.
Third, find people who are used to dealing with that kind of person already. For example, let’s say you come across doctors and you want to know how to talk to them about your investment opportunity. Would it not make sense to talk to several pharmaceutical salesmen who do that for a living? It just so happens that I know of at least four people who already do that, and chances are you do too. I’m sure they could give you wealth of tips about how to approach doctors. Same goes for whatever kind of wealthy person you want to approach-find someone else in your sphere of influence that deals with people like that in the course of their every day life (usually not for real estate purposes, or they might be a competitor!) and pick their brain about how to talk to the kinds of people they know well.
They might not have approached those same doctors to get them to invest in a project, but they’ve talked to them regularly. They know how their existing approach works. They know how to fly in under the radar. They’re able to work with those people, or they’d end up getting kicked out of that business because to extend our doctor and pharmaceutical sales rep metaphor, pharmaceutical sales is a very unrewarding business if you don’t have the ability and the assertiveness to take control of a conversation with a busy doctor who has lives on the line and you’re taking up his time to try to sell him a widget. I mean, timid salespeople have skinny kids, ya dig?!
But to continue our line of reasoning with doctors as an example group of wealthy people and pharmaceutical sales reps as people who make a living talking to and selling to that market, you will see that these guys and gals who sell to doctors are sharp and have very good conversational skills. They know what works and what doesn’t with doctors. It’s the same with CPAs. CPAs are a certain type of breed. We all know we don’t like being stereotyped, but we still all do it. If you all want to learn more about that, one of my favorite books is Marketing Influence: Science and Practice, by Robert Cialdini. I tell everybody about that book. It’s great. It tells you all about human influence, how to find what motivates people, what people are interested in, and the principles of influence causing people to make one decision over another.
While no one likes being stereotyped, it can be helpful at times. You don’t want to price people out of your information, your market or whatever it is and say because that person is this or that they wouldn’t be interested in it. You could talk to people who sell cars, for example, and they’ll tell you that if a black person walks in, they aren’t going to buy a car. Then, there are others who will tell you, if a Jewish person comes in, they’re not going to pay full retail for a car. Or, if an Italian person comes in, they’re only interested in being macho and having a big red convertible car. If that type of person walks in and they don’t have that type of car in inventory, or they don’t like dealing with people who won’t pay full retail, or they think that they’re broke, they won’t even try to sell them a car.
Yet, those people have proven just by walking into the car dealership that they’re interested in buying a car. What if that same car salesperson had somebody walk in who was Black, Jewish, Italian, and a woman who smoked cigars? How would he sell to that person? Think about it. Someone could be in all of those groups, which means most of those stereotypes wouldn’t hold true, so don’t get too caught up in stereotypes, but use them to find out what people have in common.
Let’s get back to the subject at hand: approaching wealthy people as potential investors for your real estate business. As I was saying earlier, it’s important to have a number of different elevator pitches already prepared to give to these people who you just bump into. You have a quick chit-chat. Keep things very low key, and then say something like, “Oh, by the way, I don’t know if I ever told you this but…” It’s not a sales pitch. It’s simply throwing out a net and seeing if they step into it. This is the best way to fish.
I really don’t have the patience for fishing, but if I did, I would look for a way that I could throw a net out and just let the fish hop into it because they wanted to. Do this for your doctor, your CPA, your attorney, and the affluent professional that you run into in the building where you work, where you’re going, where you spend time, or at a conference. Keep it low-key. Let them step into your marketing net, if you will, and then give them more information. You don’t want to overload them with too much.
A good example elevator pitch you can use for approaching wealthy people as potential investors in your real estate business might be something like this: “By the way, I don’t know if you ever knew this or not, Dr. Smith, but I work with a number of affluent individuals, both myself and through investor groups, some of whom have seen the intelligence of placing money in secure projects that are backed by real estate, receiving a very healthy and generous return that currently outperforms what you’re probably already getting on your existing savings or retirement accounts.”
I have used something similar to that for years, and it works for me and for my personality. Your job is to create what works for you and your personality, but those are the points that you want to hit: others have seen the intelligence of doing this- that’s social proof- safe, secure, and backed by real estate.
You may ask why say “Healthy and generous return” and that’s a legal question. Do you want to give it a number? In my experience, no not at first you don’t want to talk percentages. Not unless you want to go to jail. You’ll give that later-after you’ve established a relationship with these people. Remember, my advice is not legal advice; it’s marketing advice. You’re having a conversation with somebody you bumped into in the café of where you work or in an elevator. You want to let them know that it’s safe and secure, backed by real estate-healthy and generous return that outperforms what they’re currently getting in their savings or retirement accounts. That’s all you need to say, and let them tell you if they want to learn more. Then and only then can you qualify them per appropriate legal regulations and then share with them more particulars and specifics about returns they can expect as one of your private investors or lenders for your real estate business.
I like saying “others have seen the intelligence of doing so” in a situation like this because everyone (especially those with large egos) wants to be seen as and to feel ‘intelligent’. It’s a loaded word that in our culture is highly priced-even by dumb people. I mean think about it, how is it that in blind surveys over 80 percent of respondents consider themselves “Above average” when presented with a range of options with regards to their intelligence? I mean, just 3rd grade math tells us that 80% of people CANNOT be ‘average’ yet again and again people’s perception (or secret hope) about themselves is that they are ‘smarter than the average bear’ as Yogi would say. You’re hitting that social proof button also when you say something like “others have seen the intelligence of investing”.
Here’s one last thing that you want to throw in there that I like to call the upper-cut. You may not have a project right now to put them into but you still have your feelers out looking to raise money for your real estate business. You may not have a property right now that you’re raising money for, but you want to be able to get them to identify themselves if they’d be interested in that, so that you can follow up with them later.
By the way, these are not people that you send a whole bunch of emails or whatever. These are important people who raised their hands and said I’ve got the ability to give you $100,000 or $500,000. You follow up with them one-on-one because they deserve it. Not that everybody doesn’t deserve it, but we’re talking about leveraging your time. If you’re like me and you’ve got 25,000 or more people on your buyers list, you might only find 80 people who are willing and able to give you $100,000 or $500,000 and those people should hear from you regularly, whether you have a project to put them into or not. That doesn’t mean the rest of the tens of thousands are unimportant, it just means you have to prioritize your time if you are looking to approach wealthy people as potential investors in your real estate proejects.
That being said, the next thing that you want to do is let them know, “Sometimes I have a project that’s available for investing. Other times, I’m completely oversubscribed, meaning other people invested. However, I’d like to have your permission, Dr. Smith, to keep you in mind for the opportunity to invest with me when I come across things that meet your criteria. Is that okay?”
It’s very simple. That whole conversation can be had in less than 2-3 minutes and touch on each of those terms I mentioned. That’s why those things are called elevator speeches. You’re between levels 14 and level 1 heading down in the lobby, they’re getting ready to go to the pool, you’re getting ready to go to lunch, whatever; you just had a 60-second to 180-second quick conversation.
You threw the net out, and they jumped in and said “Yes. I do have some funds that I think I could probably get some better returns on. How to I find out more?” Bam! You exchange cards with them and say “I’ll follow up with you Dr. Smith, Dr. John, CPA Tony”, or whoever it is. That is how simple approaching wealthy people as potential investors for your real estate business can be.