Last week, my partner and I presented a new multifamily deal to our private investors. Our current approach is to set-up a 60-minute phone conference using the free software at www.freeconferencecall.com.
For those who are currently raising money for deals, or expect/desire to raise money for deals in the future, presenting a deal to investors can be a stressful experience, especially if it’s your first time. In order to mitigate the stress, preparation is a must. That being said, I wanted to share how I prepare and structure my presentations for investors.
1 – Get Your Mind Right
First, you have to get in the right frame of mind. What I mean by that is you must answer the question, “Why am I presenting this opportunity to investors?” I write the answer to this question at the top of the Word Document outline I use as a guide when presenting a deal.
At the top of the document, in bold letters, reads, “I am here to serve. I am here to help my investors retire, do what they want with their money, and ultimately do what they want with their time. When they get the returns we’re projecting, then they’re going to be able to spend their time the way they want to spend it.”
If I accomplish the goal of this statement, it is a win-win for both my business and for my investors. A personal belief I hold is when people spend time how they want to spend it, they will naturally gravitate towards doing more altruistic things. I’m not just helping my investors make money, but I am helping them have the financial freedom to do what they want with their time, which in turn, will result in more altruism and philanthropy in the world.
So, starting out with the right mindset, as well as coming from the heart and knowing that you’re there to serve the investors is the foundation for a successful conference call.
2 – What’s Your Main Focus?
In addition to getting myself in the “service” mindset, I also remind myself what my main point of focus is – capital preservation.
This became my main point of focus in part due to an interesting psychological concept called loss aversion. Loss aversion refers to people’s preference to avoiding losses relative to acquiring an equivalent gain. In other words, people’s negative reaction to losing $5 is greater than the positive reaction of gaining $5. Through personal investment experience and after interviewing 1000 real estate professionals, I have anecdotal evidence to support this concept as well.
Assuming you are conservatively underwriting a deal (which you should) then capital preservation needs to be sprinkled into the discussion with investors.
3 – Introduction
Now that my mindset is right and I’m focused on capital preservation, I’m ready to start the actual conference call. I start every call with an introduction, which is a simple summary of my background.
Additionally, I provide my email address and ask the investors to send any and all questions to me so that my business partner and I can answer them during the Q&A session (see step 6).
4 – Deal, Market, and Team
After I’ve provided my bio, the call is structured into three categories.
- The Deal Details
- The Market Details
- The Team Details
I’ve already determined the main highlights of the deal, so before going into granular details on the three categories, I provide a high level overview of the deal. The overview explains the main reasons why I like the deal. I do this because I want to focus on and continue to reiterate these main points throughout the call. I don’t want to discuss these three data points and have everyone’s mind swimming in numbers. I want to make sure that the points I want to make about the deal are clearly and consistently communicated.
For the investor call I had last week, the two main points for that deal were exceptional location and a proven business model with a proven team. I led off with that, and that was the theme throughout each of the three categories.
Next, I went into each of the three categories and explained the highlights of each.
When I say something like, “It’s an exceptional area,” I will follow it up with, “and here’s why,” versus just throwing out hyperbole. You always want to have stats to back up your claims, and if you want to take it to the next level, tell a story as well.
For example, the deal I presented to investors last week was in Fort Worth, Texas. I mentioned that it’s an exceptional location. The population is growing, and as a reference point, the U.S. Census Bureau named it the number one fastest growing city in the United States, with a 47% population growth from 2000 to 2015.
I could have left it there with that stat. However, I went on to explain why the population is growing. I mentioned job growth, job diversity, and gave some specific employers. This was the macro level overview for the market.
Then I went into the micro level for the submarket. I talked about the school district and the specific employers within a 3-5 mile radius.
Overall, it’s important to know what you’re talking about (obviously), but mention the numbers and the reason behind the numbers, rather than just stating statistics. Tell a story, and then make sure you are hitting the points you need to hit, which are the ones you’ve predetermined are the most important selling points or desirable attributes for the particular opportunity.
5 – Dive into More Details
I present steps 3 and 4, which takes about 15 minutes. Then my business partner talks for another 20 minutes. He explains the business model in more detail, the financing we are obtaining, etc.
6 – Q&A
Finally, the rest of the call is the Q&A session to answer the questions investors emailed me. I will reply to some of the emails while my business partner is speaking, but most of the questions are addressed at this point.
At the conclusion of the Q&A session, the conference call is completed.
7 – Send Recording to Investors
Since I record all conference calls, I will send out the link to the recording to all my investors. I do this because probably around 40% of the investors aren’t able to attend the call.
My conference calls with investors consist of 7 steps:
- Get my mind right
- Determine my main focus
- Three categories – deal, market, team
- Dive into more details
- Send recording to investors
When you follow this 7-step formula, it makes for a very concise conversation and you’re able to have an effective call.
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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.