I’ve been writing about buying apartment buildings with money from private individuals. Someone had asked me “How do you find local investors that are interested in discussing deals?”.

Great question, let’s talk about it!

For several years before getting involved with investing in apartment buildings, I was renovating houses, fixing them up and reselling them. To finance these “rehabs”, I raised the money from friends and family. The minimum investment was $25,000 and paid I them 12% to 15% simple interest, guaranteed by the house. The title companies took care of the promissory note and recording the deed. As I was eyeing commercial real estate, I polled my existing investors to see which ones were interested in buy-and-hold commercial real estate.

I was disappointed to find that only a few of my existing investors were interested. However, I found that people I knew were able to refer me to people who were interested.

The lesson here is not that you should start small first (with rehabbing houses, for example) before moving into commercial real estate. Rather, the lesson is that you should leverage your existing sphere of influence to achieve what you’re looking for – in this case, to raise money for apartment buildings or doing flips.

In short, the lesson (which was also confirmed in a recent Podcast with Mike Simmons, ) is to talk to everyone you know.

But how?

It’s surprising who your family, friends, neighbors and co-workers know. Never discount anyone – tell everyone you know what you want to do and you will be surprised at what will happen. If someone refers you to someone they know, always follow up. Even if that person will not invest, she may invest later or she may be able to refer you to someone else.

The conversation might go like this after you dispense with the small talk:

You: “I’m working on something new, maybe you can help.”

Susan: “Oh?”

You: “I’m looking to buy an apartment building in the metro area with a group of investors. The annual returns are expected to be around 13% and the minimum investment is $50,000. You wouldn’t happen to know anyone who might be interested, would you?”

Susan might say, “Well, I might be interested,” or she might refer you to someone, or she might say that she doesn’t know anyone.

If she is interested herself, schedule a meeting with her. If she knows someone, have her make an introduction and then follow up with that person. Make sure you keep Susan informed about the progress.

Your goal is to have as many in-person meetings with potential investors as possible.

Keep these tips in mind:

 

  • It’s important that when you invite someone to that first meeting that you say what the minimum investment amount is. Otherwise, if you’re looking for a minimum $50,000 and the person only has $10,000 to invest, you’re wasting everyone’s time. By the same token, if the other person accepts the meeting, then they’re implicitly saying that they are capable of and potentially interested in investing at that level.
  • Don’t “discriminate”. Often it’s impossible to tell who has money and who doesn’t. It’s amazing how much “little old ladies” have stashed away in their IRA accounts. Similarly amazing is how little money the flamboyant stock broker neighbor next door has to invest in anything besides his boat and second house.

 

Therefore, “EVERYONE” is the key: Talk to everyone, ask everyone for a referral, and follow up with everyone.

If you talk with everyone you know today, and follow up with referrals, you will be amazed at how much money you’ll be able to raise to invest in apartment buildings.

Let me hear from you below!

The Secret To Raising Money To Buy Your First Apartment Building

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