15/03/2018
Are you chasing Investors, or are you assessing them?
When my my wife and I started our property journey as property sourcers we were always seeing posts about asking what it is that was IMPORTANT to investors, with a barrage of questions all solicited to put the investor in a place of importance and you in a place of valuing their wants (or servitude if you like). We had a slightly different outlook on this, coming from 20 years in Psychiatry and NHS Management, we also had some wants, but ours were focussed around assessing Mr/Mrs Investor, not to establish weather or not they are a few waves short of a ship wreck (though handy to know!) but more of a way to assess them as a person, their character, their values and of great importance their professionalism.
It’s not just about the money is it! Or is it? Whats your mindset!
We have now teamed up with a friend with his own Architectural firm, to move our business goals further forward with Commercial Conversions and small Developments, our process for working with Investors was also along the same lines, their values would have to align with ours.
I believed it was important for us all to have a mindset of assessing rather than chasing the money, if we had the mindset of short term success at the sacrifice of long term growth we would quickly lose if we got into bed with the wrong Investor just to get a deal.
We have found more people talking the talk and showing great interest in either us finding properties for them or working on larger CC deals, but when it comes down to action many show their real strengths and weaknesses, the key is to tease out those qualities early on, really early on.
Now I agree with finding out whats important to an investor, but I also think putting your values, goals, plans on the table early puts the relationship building process on the right foot. If all you have is a list of the Investors wants, and none of your own, are you creating a win/win mentality or a lose/win mentality. From the first meeting we both know what’s important to each other before that second cup of coffee.
But it’s not just coffee, oh no, its then time to assess other qualities, from both sides of the equation, after all, whats going through your mind regarding the potential investor is probably going through their mind too; Do I like this person? Can I work with this person? Do I trust this person? Are they all talk and no trousers? Are they going to bend me over the first chance they get? Nows the time to find out!
Some area’s we look to assess are, ability to communicate in a timely manor, Character qualities such as doing what it is you say your going to do and being open and honest from the start, professional/business qualities that indicate intent and follow-though, likeable qualities as a person, integrity and caring; there are many others.
We keep the relationship building going through e-mails and messages, general chit chat, sharing business plans etc, but we use services that show us that messages are being read, or e-mails have been opened, we want to know that are comms are getting through. We are now dating.
This early stage weeds out many people, try sending small deals to gauge their level of communication, ask for another meet up to discuss a deal on the horizon, if you know they have received the messages and they don’t respond this may be an indication of their qualities. We always try 3 times, then walk away. There may be a good reason the 1st time, but after 3 there is a clear message being sent. (there has actually been 1 Investor who was admitted to hospital, I knew something wasn’t right as neither e-mails nor messages were being read, and I have good nose for people, I waited for them)
If a potential Investor stops communicating with you, without a reason, this shows to us a significant lack of character, even if their values/strategies are different simply ignoring you speaks volumes about who they really are. We want to get this out of the way early, so we test and assess, and I know Investors we work with do the same, they’ve told us.
Now imagine not knowing this about someone, and your so eager to get a deal over the line and the Investor, in the 11th hour, suddenly lost the ability to communicate. What damage will that do to you psychologically, but also to your business and reputation. Worse, what if they’ve cut you out of the deal completely and side swiped you!
Now I have a slight advantage when gauging people, 20 years as a Psychiatric Nurse produces some useful skills, but a lot of the qualities we look for are in the action part, not just a sit down and chat part. The latter does allow us to make a decision, as a team, that if we feel someone is showing unfavourable qualities from the first meeting we can end it there, and if there is an agenda from the Investors side of a win/lose scenario then its time to call it a day, we don’t want to be second guessing future deals and always wondering if they’re trying to screw us behind our back, thats not a business relationship we want nor need; it shows a mind set of someone looking to win at any cost!
I guess the point of this post is to get you to think about your mindset when you're trying to find investors. It’s not all about them. Its just as much about you too.
Create the Win/Win mindset, the belief that if this person isn’t aligned to your values and your business plan for the long term, then you will respectfully walk away and keep looking. It takes time. It takes patience. But it will save you a lot of pain in the long run, just don’t quit.
If your desperate to find an investor you may not show the Due Diligence needed to vet them, and all the rationalisation in the world won’t change or show you who they really are…if you stick a Rose in an ar****le it’s not a Vase, its still an ar****le!
Through our processes we have found a handful of great people I’m happy to work with, and using our values system and communication skills have found fruition in Joint Ventures with building and land owners.
Good luck, keep going.
We source properties for investors and can even provide a project management service for a totally hands off investing experience. Commercial Conversions into residential dwellings and small developments enable greater returns for investors looking for the next level, the investment level can be JV....
