For the retail investor, private real estate is an emotional investment. Individuals like owning a piece of a physical asset because it’s tangible and easy to understand. They tell their friends about the investment, drive by the building, and engage directly with the operator.
Much like a young person owning Apple stock because it’s cool and they love the products, owning real estate says something about the person; they have exclusive access to deals through a close personal relationship, have cash to invest, and they’re savvy investors.
For a real estate firm to build trust and turn investors into advocates, they should tap into that emotion. Here are a few of the things we do at Atlas to cultivate our investors (doing quality deals that offer strong risk-adjusted returns is the pre-requisite):
Use video to showcase the asset. I’m not talking about the type of video you would expect from a real estate company, I’m talking a slick video with high production quality. Use a drone to highlight the site, views, and location, throw in some cool time-lapse video, and share the stories of the staff and tenants. These videos are no longer exorbitantly expensive to shoot. In fact, in most markets you can find a couple of talented college kids to do it cheaply. Investors would prefer to watch a video over reading through financials any day.
Thank your investors with hand-written notes. Every investor is taking money out of another investment or using cash earmarked for other great opportunities to do your deal. You should be privileged that they have chosen to invest with you. Don’t take that lightly. Show them how much you value that by taking 10 minutes to sit down and send a hand-written thank you. In a world of bulk email and quick communication, this will go a long way.
Send your VIP investors year-end gifts. In addition to a hand-written note, send your investors a gift. Focus on the long-term investors who believed in you when you had no track record and the guys who’ve gone out of their way to refer you to other investors. It doesn’t have to be expensive, but make it memorable and special.
Over-communicate with investors. Historically, real estate syndicates have a negative connotation because of scams and fraud. Eliminate those fears by communicating with your investors every step of the way. Find time to meet with them in person, pick up the phone and give them a call, or just shoot them an email asking for feedback and what you can be doing better. It’s time-consuming, but well worth the effort.
Find ways to better serve your investors. The status quo of quarterly updates and old school communication isn’t enough. With emerging technology, you can improve the overall investor experience by utilizing e-signatures, secure online doc storage, and online dashboards allowing investors to visualize their portfolio and deal performance. Take advantage of these new technologies and find ways to enhance your investor experience.
High-net-worth investors today have endless investing opportunities and with the emergence of crowdfunding portals they now have access to other real estate operators, tech start-ups, and just about anything you can think of. Don’t take for granted that they chose your deal and decided to invest in YOU.
What have you done to cultivate your investors?