Investor Analysis After Closing on a 296 Unit: 2 Lessons Learned

[Joe Fairless]

I did an investor analysis after closing on a 296 unit last Thursday and came away with some interesting findings. This is the 4th purchase in the last 12 months. You can read about my lessons learned on the other ones here:

https://www.biggerpockets.com/forums/223/topics/217842-closed-on-250-apartments-in-houston-texas-yesterday-2-lessons-learned

https://www.biggerpockets.com/forums/223/topics/294621-closed-on-155-units-in-houston-yesterday-3-lessons-learned

https://www.biggerpockets.com/forums/223/topics/316836-closed-on-320-unit-last-week-6-ways-to-break-into-the-biz

This analysis looked at the investors who invested, in particular, looking at if they are new or returning AND how much each (new vs. returning) contributed to the total raise.

Here’s the finding on this deal:

• 69% are new investors
• 31% are returning investors

The interesting thing I found is that the % capital contributed to total raise was almost split 50/50. See below:

• % contribution to total raise for new investors: 49.6% 
• % contribution to total raise for existing investors: 50.4%

So, here are a couple takeaways for anyone in the biz of raising money for their projects.

1. New investors likely won’t invest as much per person as returning investors. Ex. On this deal 31% of my returning investors invested 50% of the total equity raise. However, guess what, after the 1st deal the new investors are no longer new investors! So as long as you deliver and/or exceed expectations it’s likely the amount invested will increase over time.

2. Always have 3 ways to bring in new investors then convert them to returning investors. My 3 largest lead generation sources for new investors are:

1. Referrals from current network. 

I don’t ask for referrals from my current investors or clients, but I do get them. One suggestion is to provide your investors (or potential investors if you don’t have them yet) content that they can and want to share with their friends. For example, I wrote a book (Best Real Estate Investing Advice Ever: Volume 1) and mailed out TWO copies to each of my investors. wrote a personal note to the investor on one of the books and told them the other book is for a friend of theirs they’d like to give it to.

2. My podcast (Best Real Estate Investing Advice Ever Show.

My podcast is the world’s longest running daily real estate podcast. The daily show has helped me have a consistent presence in iTunes and via Google searches. Most importantly it helps people get to know me even though we’re not having a one-on-one conversation.

3.BiggerPockets

I’ve posted over 2,500 times over the years and have been rewarded 10x over via the new friendships I’ve made from BiggerPockets  

Hope this is helpful for your money-raise efforts as well!