Whether you’re new to real estate or not, you know by now that you can’t run your business alone. You need partners, investors, brokers, management companies, and just plain old friends that understand your entrepreneurial journey.
How do you transition into real estate if you don’t know anyone? Kenny Wolfe from Wolfe Investments and I recently talked about three key ways to build real relationships within real estate. Kenny started in the oil and gas industry, and 9 years ago moved into real estate after a family friend recommended it. Currently his multi-family portfolio now tops $180 million dollars, and he counts networking as one of his greatest assets.
Build a Network By Partnering and Joint Venturing
Sliding into a new town, it can be hard to find those sweet off-market deals that really help build a portfolio with huge returns. But coming into a new town with a local partner establishes your credibility right from the start. Kenny likes buying management companies and creating joint ventures as a path to trustworthiness.
When you want a new town to trust that you can put together a deal and close on it, Kenny says that it takes a purchase of about a hundred units for that to happen. Even if you know you can close on a deal because you’ve got your funds all lined up for it, you still have to cross that threshold of being a proven buyer to the local brokers.
Once that happens, brokers are going to start bringing you bigger and better deals. Kenny has also found that buying local management companies helps give him an edge over other investors. You’ve got to remember that there are two types of off-market deals. One’s truly off- market, direct to seller. The other is basically a pocket listing. Management companies know when somebody’s becoming a tired landlord and is getting ready to sell.
If you’ve got a lot of capital, or if you are passionate about finding the best deals, how do you go about finding partners or creating joint ventures? You could probably do this from behind your computer, but the real movers and shakers are out attending conferences and masterminds. Making real connections with real people is going to really help take your real estate game to the next level.
Build a Network with Conferences and Masterminds
Conferences and Masterminds are awesome for in-person networking or for educating yourself. As active investors, both Kenny and I spend a lot of time trying to find investors who are ready to partner up with us. At conferences, masterminds, or even just in social media, we spend a lot of time providing value for passive or potential active investors.
I’ve been in great masterminds, and it’s really cool to get in a room with that kind of high caliber investing, just bouncing ideas off of each other. If you’re looking to invest, you’re looking for a partner, or if you’re just looking to learn, a mastermind can really take your real estate game to the next level.
Kenny’s journey from oil and gas into real estate started with a guru group recommended by a friend down in Texas. He attended his first conference with his wife, and was just soaking up all of that knowledge when he realized that multi-family was definitely where he wanted to park his money. Of course, it helped that he was already in a place where lots of deals were going on, so it was natural that he could immediately start looking for deals with his capital.
The more and more masterminds I network with, the more I hear about the great education coming out of conferences and other masterminds. If you’re looking for a great conference to attend, find one like Kenny’s, which prides itself on being an education networking event. They’ve got people there to talk about investment strategies, management strategies, title companies, or anything else you need to know about before investing.
You’ll end up seeing a lot of the same characters at these different events, but that’s exactly what you want because you’re trying to network and build real relationships.
Build a Network by Investing in Real Relationships
Sometimes when I hear an advertisement for a multi-family deal, and the guy says, “Hey, we just have a few spots left, so sign up today!”, it sounds like it might be a great deal. But then the next week and then the next week it’s the same old message. Their great deal is just an excuse to take the handcuffs off of their marketing so they can talk about their deal flow. Don’t be this guy.
You can use the 506C to build real relationships, but it’s got to be done right. You have to give some education, provide some real value, and give people something they can really sink their teeth into. After you’ve provided all of that, then you can pull them off of the marketing channels onto a phone call or a messenger chat and spend some time building a real bond with them.
If you’re not using the 506C to build real relationships, then Kenny’s method for using the 506B might be more in your ballpark. He says that it requires a lot more legwork from him. He has to travel a lot and get in front of more people, but he feels like it helps him get to know his investors better.
We ramped up a 506C campaign a few years ago, looking for investors, but we struggled to find people willing to opt-in. I see a lot of people promising that if they throw up a lot of marketing, they’ll be able to find tons of investors, but that’s just a lot of smoke. If people don’t feel like they know, then it’s hard for them to put their money in with yours.
Crowdfunding platforms work because they let the investor vet the operator and put in just a little bit of money. So for a $5 million dollar deal, they might have dozens or hundreds or investors. That’s a lot of people in on a deal! Kenny thinks that crowdfunding is a budding industry, but it’s not there yet for real estate investing.
Whether you go with a 506B or a 506C,you’re still going to have to build a real relationship with an investor so that they’ll trust you with their money.
All real estate deals are about relationships. Creating those relationships, even if you’re starting from scratch like Kenny did, takes some time and effort. Get out there and meet some people. Attend a conference or a mastermind. And start building your investing network the right way.Be daring,