After a steady 10 years of value growth, real estate — and the economy as a whole — is finally starting to correct. We continue to see outsized inflation. We continue to see very strong employment. Consumer sentiment is starting to wane. And with the Fed’s interest rate hikes, two large banks failed in March 2023.
Specific to those that jumped in within the last five years, the current market can feel earth-shattering. All of a sudden, people are not filling your CRM with new contacts. Those that are coming through may have little to no capital immediately available. And even with the number of syndicators starting to decline, there are still a lot of groups out there fighting for a smaller pool of capital willing to invest.
So how do you continue to succeed in this more challenging time? It comes down to your true network. When I say true network, I don’t mean the number of email addresses you have in a database, although there is a value to this, too. I mean: Who do you know? Who answers your calls when you ring? Who have you met for coffee or dinner? Whose children have you met?
It is this group that will continue to support your deals in good times and bad. And oftentimes, it is the second-tier connections (friends of friends) that are also more likely to invest in your deals. At the end of the day, syndication is primarily marketing and sales. You need to develop a plan for people to know, like, and trust you. And in a recession, the like and trust pieces become much harder to establish. So, what actions can you take to help further your cause?
1. Become the host.
We all have different levels of friends. We have our closest friends. Then we have our “football” friends, work friends, or kids’ school friends. An easy way to grow your network is to try to move those friends into expanding buckets. I, personally, like to invite people over to my house. If they are loose acquaintances, I plan a bigger gathering with several friends together to ease any possible trepidation.
This strategy — specifically, hosting larger gatherings — also opens you up to becoming the center of a growing network as you allow your friends to bring friends.
2. Ask for referrals.
While we all have our group of close friends and family members, not all of these friends and family members will be in a position to invest in your deals. But they very well could know someone. As noted above, second-tier connections can be a ripe group of investors. With this group, you are leveraging your built-up trust with your friend, and their trust with their friend.
I have heard time and time again, “I’m investing because my friend recommended you.” But these connections will never come if you don’t ask your friends. Personally, this has always been a challenge for me, as it can feel a bit pushy or presumptuous, but I have found that if these are truly your friends, they want to help you succeed, too.
3. Meet in person.
While points 1 and 2 are tips to help expand your list of contacts, this one is focused on expediting trust. There is no substitute for meeting someone face-to-face. We all learned this having lived through COVID lockdowns. Humans need to interact with one another and have new experiences.
As such, I try to meet with as many investors as I can. Doing so one-on-one is generally best. There is certainly value to hosting groups, as noted above, but nothing shows a person they mean a lot to you more than taking time out of your day to speak with them directly. You can also pick up on a lot of things when you meet in person that wouldn’t have come across in phone calls or Zoom. Simple things like smiling when you see the person, looking them in the eyes, and giving a solid handshake can help you be more likable and earn trust quickly.
Trust is built through repeated exposure and multiple positive interactions, so it can help to move locations during the meeting if you’re able to. If you meet a potential investor for dinner and drinks, for example, pick two nearby locations. The effect of having a drink at one place followed by a short commute or walk to the restaurant creates the effect of having two interactions instead of one. If you’re meeting locally, you can even host your contact at your place for a drink prior to driving to dinner. Again, this can psychologically create the effect of having had multiple interactions within the same amount of time.
4. Follow up.
With both new and old connections, you should always follow up. For my friends who I know I will be seeing and talking to again, I send a simple thank-you text expressing my gratitude for getting to spend time with them. The same is true for new connections, along with something more. Pick something that came up in conversation or that you learned about them during your time together. Did you recently read a book or interesting news story that made you think of them?
Beyond just a thank-you message, plan a follow-up get-together. As noted above, I like to get families together. If it is a new business acquaintance that I have met a couple of times, I try to plan something more social with spouses and kids at my house. This scenario is ideal if you have small kids because you can avoid trying to battle impatient children at a restaurant.
Conclusion
At the end of the day, as a syndicator, your goal is to get your potential investors to know, like, and trust you. There are ways to expedite some of this, but ultimately, it is all in building and developing your relationships. In these times when everyone is tightening down and being more cautious with their hard-earned capital, leaning into your existing network while continuing to grow it will pay dividends.
About the Author:
Evan is the Director of Investor Relations for Axia Partners, a diversified real estate fund operator, focused on recession-resilient assets. With over 16 years of real estate experience, Evan spends his days working with investors to better understand their investment goals and backgrounds. Please feel free to connect with Evan on LinkedIn, where he shares his insights into the syndication space.
