How do successful business owners build lasting relationships with their capital providers? What strategies help maintain those connections while attracting new investors?
In his book Raising Private Capital, Matt Faircloth outlines several ways to develop a thriving real estate investment business. His approach, which is transferrable to other types of businesses, combines systematic networking, effective communication, and strategic brand management to create sustainable partnerships with investors.
Keep reading to discover how to manage investors while building a successful business.
How to Manage Investors
According to Matt Faircloth, establishing and maintaining relationships with capital providers is crucial for success in property investment. Faircloth emphasizes that deal providers must adopt a systematic approach to locate, partner with, and manage investors effectively. Let’s look at the details of his advice on how to manage investors.
A Tiered Approach
Faircloth recommends beginning with a close network of trusted contacts, including family members and friends who believe in your ventures. This foundation can then be expanded through various engagement strategies. These include attending social gatherings and real estate-focused meetings, where discussing your investment journey can naturally spark interest.
The approach can be further enhanced by tactfully utilizing alumni and social media networks, sharing deal updates rather than making direct solicitations. Faircloth suggests maintaining a detailed contact list and hosting educational events to help potential investors understand the differences between passive and active real estate investments. Cold calling, mail campaigns, and online investment platforms can also help broaden the network.
Communication and Relationship Management
Maintaining consistent communication is vital for long-term success. The process typically begins with an initial message and screening tool, followed by conversations focused on understanding investors’ financial goals. Faircloth stresses the importance of quick follow-up with enthusiastic investors and developing strategies to stay connected with those who may invest later.
For effective investor management, Faircloth advocates:
- Using CRM tools and communication platforms such as MailChimp for consistent newsletter distribution
- Demonstrating deep knowledge of property investment landscapes to establish authority
- Organizing face-to-face or virtual meetings to foster authentic relationships
- Being transparent about both successes and challenges to maintain trust
The sustainability of these partnerships ultimately depends on continuous relationship nurturing and responsible stewardship of investor capital. Faircloth notes that since real estate profits don’t materialize immediately, maintaining an attitude of perseverance and determination is essential for long-term success.
Brand Management and Investor Relations
Establishing transparent communication goes beyond securing financing; it’s essential for building and maintaining investor trust. Regular email updates keep investors engaged and informed. Faircloth highlights the importance of timely tax document provision, including interest earned statements on personal lending and equity partnership income records, as these demonstrate a commitment that exceeds basic legal requirements. Personal touches, such as thank-you notes and gifts, can further strengthen these relationships.
Brand presence plays a crucial role in maintaining comprehensive investor relationships. A consistent message aligned with core values strengthens existing stakeholder trust while attracting new investors who share the company’s vision. Communication channels should accurately reflect the brand identity, celebrating successes while addressing challenges transparently and strategically.
Investment Exit Strategies and Financial Management
When finalizing transactions, honoring investor commitments is paramount. Faircloth recommends exploring various capital repayment methods, including property sales or refinancing options. Investors should receive detailed information about exit strategies and expected investment timelines, with support from skilled CPAs who can provide guidance on financial implications during transaction closures.
Tax-efficient strategies, such as Section 1031 exchanges, allow for profit tax deferral while maintaining continuous investment opportunities for partners. Regular monitoring of tax law changes is essential for maintaining effective exit strategies. Open discussions about market trends and potential changes demonstrate careful fund management, reinforcing investor confidence in the protection of their capital investments.
