Venturing into real estate can be a fruitful endeavor, but sourcing and securing the right investors can turn it into a game changer. While finding investors who are best suited for your projects can be challenging, understanding when to look for an investor, where to find them and how to capitalize on those connections is vital. A financial advisor may also be a good resource for connecting with potential investors.
Types of Real Estate Investors
Before you attempt to find real estate investors to work with, it’s important to first understand the different kinds of investors that exist. The most common types include private individuals, institutional investors and real estate investment trusts (REITs).
- Private individuals: These investors buy real estate on their own behalf and may be interested in a wide variety of properties, including residential and commercial real estate. Private individuals may consider themselves buy-and-hold investors interested in long-term ownership or flippers who look to turn a quick profit.
- Institutional investors: From pension funds to insurance companies, institutional investors typically possess significant finances and invest primarily in large-scale real estate projects.
- Real estate investment trusts: REITs are companies that own, operate and finance income-generating real estate, thereby enabling individual investors to purchase shares in commercial real estate portfolios.
When to Look for Real Estate Investing Partners
There are certain scenarios that make partnering up with another real estate investor a sound decision. For example, say you find a potentially profitable property to acquire but don’t have enough money to pull off a deal. Bringing on an investor may increase your purchasing power and enable you to close the deal.
Perhaps you want to diversify your portfolio by adding commercial property to it, but you lack experience when it comes to buying and managing this type of real estate. In this case, it may make sense to partner with an experienced commercial real estate investor.
Or maybe you have money to invest in residential real estate but don’t have the time or the bandwidth to actually manage it. You could potentially work out a deal with a partner in which you front the money for the deal, and in exchange, they assume the day-to-day management responsibilities.
While the circumstances might not hold true universally and don’t guarantee success, understanding these situations gives you an edge in strategic decision making. Keep in mind that mismatched partnerships have the potential to result in financial losses or missed opportunities, so it’s important to find the right fit.
Ways to Find Real Estate Investors
Connecting with potential investors can be done in a variety of ways, from traditional networking to online platforms and social media. Let’s delve into some of the ways you can find real estate investors to work with.
Real Estate Events
Both local meetups and grand-scale national conferences serve as invaluable networking platforms. Filled with potential investors and industry knowledge, these events can offer ample opportunity for those looking to connect with potential real estate partners.
Your Network
Don’t overlook the potential partnerships and connections that your own network may provide. Friends, family members and colleagues may offer support or leads to prospective investors – or want to invest themselves.
Social Media
Social media platforms like LinkedIn and Facebook extend beyond social and professional interactions — they can also be powerful lead generation channels.
Real Estate Agents
Real estate agents often have extensive contact lists within the industry, which may include real estate investors. Although their help doesn’t guarantee that you connect with potential partners, real estate agents can be great resources to tap into when looking for investors.
Investing Websites
Platforms such as BiggerPockets, CrowdStreet and Roofstock are all potential avenues for finding real estate investors and investments. BiggerPockets, for instance, offers a suite of tools you can use to find deals, manage properties and connect with other investors.
Tips for Attracting Investors
Attracting investors doesn’t solely revolve around finding them. How you present your project and align it with their investment goals is equally important. Follow these tips for attracting real estate investors:
- Leverage your social media. Social media can provide an avenue for you to showcase your project, share updates and engage potential investors.
- Be upfront and specific about the deal. Transparency is pivotal to attracting and retaining investors. Explicitly convey your offers, potential returns and associated risks.
- Create profiles of all properties. Providing detailed property profiles can offer potential investors clarity about a project’s scope. High-quality photos and in-depth property information should be key features of these profiles.
- Be mindful of their time. Prompt responses and efficient, professional communication are indispensable when dealing with potential investors.
Bottom Line
Developing an understanding of the types of investors and knowing how to attract them can boost real estate ventures. By leveraging the right connections and avoiding mismatched partnerships, real estate professionals can potentially diminish the risk of unsuccessful deals, maximize their investments and pave the way for a thriving future in the industry.
Real Estate Investing Tips
- A real estate agent isn’t the only professional you may want in your corner when investing in real estate. A financial advisor can help you make key decisions surrounding your investment and integrate it into a personalized financial plan. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- Real estate investing offers a number of tax benefits that traditional equity investments like stocks don’t provide. For example, you can subtract a property’s depreciation from your taxable income, meaning you receive a deduction for how a building deteriorates over time. Be sure to read up on the various benefits associated with real estate investing and how they can factor into your financial plan.
Photo credit: ©iStock.com/Koh Sze Kiat, ©iStock.com/ArLawKa AungTun, ©iStock.com/Oleksii Didok