If you’re looking to invest in real estate using other people’s money, that is by using Joint Venture (JV) partnerships, forget about using the internet. It’s not worth your time and money. Online lead generation is complex, expensive and requires a sophisticated sales process to close the leads. It’s also much riskier than the types of investors most of us who are personal investors should be playing with.
Russell Westcott, a VP with REIN published a great resource called Joint Venture Secrets – Wealth Attraction Strategies for Real Estate Investors (you can buy it here for $987, which is $200 off the list price of $1187). I have it, and love it.
One of the most important fundamentals of raising funds is to identify where your potential JV partners exist with respect to yourself. He calls it the JV Circle of Influence.
Level 1: Close Personal Relationships
These people are friends, family and co-workers with whom you have a close relationship. The represent the least risk, are the easiest to contact and talk with, and they’re going to require the least potential investment to get them to partner with you.
Level 2: Referrals
The referrals are people who know about you and your real estate investment business through other people. This works best when they’re referred by people who are already a Level 1 JV partner/investor. Slightly higher risk, but you’ll often have a bit of a track record now. You’ll also be more likely to attract big money at this stage.
Level 3: General Public
The biggest group, the least qualified and the riskiest. You have no relationship with them and it’s going to take a long time and a lot of cash to close this lead. I work for a company that helps do Business to Business online lead generation, and I can tell you it’s complex and difficult. Just as one example, you should expect to pay anywhere from $50-$500 for each name and phone number you attract. And then it’ll still take 3-6 months to get a anyone to write a cheque.
I drew a graph yesterday while sitting in a Starbucks. It displays the relative risk and reward of various activities. (Click here for a bigger version)
If you’re a REIN member and you’re still confused, let me be blunt.
- Don’t waste your time putting information for investors on your website.
- Don’t waste your time trying to find investors online. Go meet them in person. Start with the numbers you’ve saved in your cell phone. Start with your mother.
- Focus on doing J.V. partnerships with close family and friends.
- Spend the cash and get a real resource like the JV Secrets package. Just one JV will attract 50-times the cost of that package. It’s worked for me.
