Using BIG Words VS Talking Like a 5th Grader: How I Raised $1.5 M

[Ryan Enk]

When talking to investors do you use big words or talk like you're in 5th grade?

I'm curious to see if anyone else has had the same experience.

Member Blog- How to Raise $1.5 Million Dollars

In my experience, most accredited investors are not sophisticated investors.  They are obviously highly intelligent, but they don't necessarily have the time or desire to learn the real estate investor lingo.  So it's a fine line for them between making a smart investing decision, and not wanting to take a 40 hour course to understand everything about the investment.

On my last 62 unit apartment deal, I had to raise $1.5 million in investor funds. My experience was that when I used words like pref, IRR, ROI, Cap Rate, or NOI, the investors eyes would glaze over. So I tried to change my approach because a confused mind doesn't make investment decisions. When I transitioned into explaining the investment the same way I would my 5th grade son, it became much easier to raise the capital.

That being said, are there any wholesalers or syndicators out there that are having more success in getting investors with advanced lingo?

[Michael Bishop]

@Ryan Enk personally I think it's a matter of knowing who you're speaking with and catering to their level of understanding. If someone is obviously well versed and has done their homework on the syndication space, talking to them as you've described will hurt your chances because you will likely come off less knowledgeable to them if you don't use the lingo.

On the other hand, while I do agree with your overall philosophy of "dumbing it down" for less syndication lingo versed investors to help them understand in more relatable terms, I think that talking to them like a 5th grader may be a bit exaggerated (and insulting). Like you said, these people are often highly intelligent, so maybe like a 12th grader :)

Overall though, I think catering to the individual investor is the most sound approach. One size does not fit all in my experience.