Why won’t your rich uncle invest with you!
Have you ever had a rich friend, uncle, or neighbor who wouldn’t open his wallet to do business with you? There can be many reasons why they refuse to do business with you. Let’s look at three common reasons and what you can do to get their attention:
1. Friends and family don’t want money to get in the way of relationships. Disagreements over money have caused many wealthy families to split up. One way around this is to create a company and make it a partner. Show them how investing in our company is no different than investing in a company on the stock market (except you both have more control). Set clear expectations for what each of you will bring to the company. If you’re smart, you’ll show them all the things you’ll do and all they have to do is write a check and look at the monthly/quarterly reports you send them. Your friends and family might also feel more comfortable if you have other investors as well. There are many ways to ease your fears, and finding out what those fears are is a good first step.
2. They don’t understand investing. There is an old saying: “A confused mind says no.” Just because someone has amassed some wealth doesn’t mean they understand real estate investing. This is where you have to be very clear about what you do. You cannot overwhelm your investors with verbose details. They need to know what you will do with their money, how they are protected, how they will perform, and when they will get paid. That’s not to say you should hide any pertinent details, however, they don’t mind if you paint the rooms white.
3. You lack credibility. Let’s face it, unless you have a large investment portfolio, it’s not proven yet. And for that matter, friends and family have known us at our worst (remember we got a D on a test in third grade). This is where your advisory board and partners become extremely important. While Aunt Susie might be willing to lend you a couple hundred bucks, she wants to know that her $100,000 of hers will come back to her. If she has done any transactions, be sure to highlight them in writing. In addition, correctly chosen experienced business partners or advisers can also increase your credibility. To help with your personal credibility, put together a professional-looking credibility kit. To help with the credibility of the deal, assemble all the numbers, images, and an investment summary in a professional manner. (Personally, I did not invest with a well-known “guru” because the presentation was not done in a professional manner.) Details in presentations matter.
Not all of your wealthy friends, family, or neighbors will do business with you. If you want to increase your success rate, make sure you send a clear, concise, and professional message. After you have made some successful investments, they will ask you to get involved.
