Apartment syndication is a great way to buy and manage large apartment communities by pooling money from investors. Irrespective of the experience, anyone can do it to build a fortune. Your job, as a syndicator, is to buy an apartment building and manage it for investors who’ll benefit from a potentially high rate of return.
In this blog post, we will talk about the 506(c) offering and how it can help get investors on board. The 506(c) allows companies to advertise their securities to accredited investors without getting approval from the Securities and Exchange Commission.
If apartment syndication seems interesting, take a look at the five creative ways to raise money with the 506(c) offering. Theo Hicks and Joe Fairless, authors of the Best Ever Apartment Syndication Book, regularly share these time-tested and easy-to-follow marketing techniques with their followers. This is how they prefer to go about their game plan:
The idea behind crowdfunding is to use small amounts of capital from a large number of investors to fund a sizable project. There are a lot of crowdfunding platforms that offer instant access to potential investors.
To succeed, pitch your investment idea on real estate crowdfunding websites. These crowdfunding platforms are tailormade to attract investors who’re looking for opportunities in this sector. In the past, Theo Hicks used StreetWise for his real estate funding endeavors. You may also hear his partner, Joe Fairless, interviewing people at Patch of Land.
Just because these websites are used by professionals doesn’t make them any better than others. You can find the one that you like by typing “real estate crowdfunding” on Google. Fundrise, RealtyMogul, and BrickFunding are only some of many other great alternatives.
According to Theo, the real benefit of crowdfunding websites is the ability to meet and find investors that otherwise stay out of sight. These crowdfunding websites make up a fair portion of the funding he received to control over $400 million in apartment communities throughout the United States.
2. Facebook Ads
If you’re willing to spend a little bit on advertising, Facebook is an ideal platform. It is a great source because you can create customized ads, which will only target investors who are eager to invest in multifamily homes and apartment communities.
Using Facebook, anyone can target exact demographics. For instance, a typical investor interested in multifamily syndications is more than 40 years old and living in population centers over 100,000. For more precise results, you may add education and profession to hyper-target potential clients. While it may take five or six Facebook ad campaigns to get the desired result, but you will ultimately reach investors interested in the project.
You can’t go wrong with Facebook budgeting because it allows advertisers to predict the number of audiences who are likely to engage with the ad. It predicts results using artificial intelligence and past behavioral data. Running regular advertising campaigns will likely improve ROI as the Facebook algorithm regularly streamlines its approach to reach the maximum number of potential clients at the lowest budget.
Despite the traditional marketing approach, local newspaper ads are still a great source of generating revenue. Ads in newspapers target older clients above 70 who don’t use the internet often.
Place ads in a local newspaper close to your intended project because lots of people, senior citizens, in particular, invest in properties they can drive by and see. This segment is most interested in nearby projects. It is precisely why investing in local newspapers within a one-hour drive of the project is a practical approach to generate buzz among senior citizens.
While crowdfunding websites, Facebook, and newspapers have their merits, webinars are by far the most overlooked advertising opportunity. According to the research, a webinar can achieve an astounding 30% to 40% conversion rate. This is also the reason why most companies suggest that it is their number-one lead generation method.
The high conversion rate is a result of one-to-one interaction with potential clients. You just need to record a webinar and send it to clients who will respond with questions. Answering their queries will build rapport and allow you to explain the benefits of apartment syndications in detail.
SyndicationSchool.com is a good place to learn about real estate syndication and how to create a webinar. You will learn how to use crowdfunding websites, Facebook, and other online platforms to direct leads to your webinars. Since webinars often have a very high conversion rate, it makes sense to use them at the end of the sales funnel to offer in-depth details about the project, business plan, and the team.
Referrals always work! For many businesses, referrals are the building blocks that build and sustain them. It’s easy to understand why referrals can create a huge snowball impact that can attract people without any sales pitch. Entrepreneurs also love referrals because referrals don’t require advertising.
If you want referrals to generate a buzz, one of the proven methods is social proof. Social proof is a psychological phenomenon wherein people copy each other for societal acceptance.
You can use social proof by introducing a potential customer to another customer in the hope that your clients will follow each other. If one is eager to invest, the other will likely follow suit because nobody likes to be left behind.
So there you have it — the five most creative ways to raise money with a rule 506(c) offering.
You don’t need to use everything outlined in this article. Instead, do what you think will work. For instance, Facebook ads are a good starting point for someone new in the industry and crowdfunding works well if you have some kind of a background. Similarly, newspapers are a proven way to attract local customers and referrals benefit everyone. You can top it all off with webinars to close the sales funnel.
Disclaimer: The views and opinions expressed in this blog post are provided for informational purposes only, and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action.