Depending on your investing strategy, sometimes you’ll need cash investors when you need to purchase a property outright.
There are lots of different ways to find cash investors. What I’m about to share with you is not necessarily the best way but is just a creative way that you may not have thought of before.
When you’re looking for a cash investor, essentially what you’re looking for is someone who has a relatively large income and some significant savings. In general this is not going to be your Average Joe who works a 9-5 job as an employee. As you know, there usually is just not enough money coming in from an average job to accumulate any significant savings. (This is probably why you got into real estate investing in the first place.)
So you’re looking for people with some money sitting in the bank. Who might that be? Well, think about how people might get a lot of money in the bank. Some might inherit it, but most will probably earn it. There are doctors, lawyers and other professionals that make quite a bit of money, and sometimes they can be good candidates. And then there are business owners.
Today we’re going to focus on business owners. Granted, business owners are not all going to be successful, but some are. If they’ve been in business for a little while and are doing things right, then they may have some significant savings in the bank.
Let’s touch briefly on what they would get out of funding your deals as a cash investor. You have to offer them something that’s going to be truly appealing to them. They’re obviously not just going to loan you the money to be nice. The only real benefit you can offer them that will get their attention is a higher return on their money than what they’re getting from their bank.
Depending on where they have their money sitting, it might be making them 5-10% on the high end, but often lower than that, especially if it’s just sitting in a regular savings account and not a money market account. So what you can offer them is a higher return, such as 12-15% return on their investment.
Now, it should go without saying, but you have to have room in your profit margin to be able to offer this. You have to know your numbers and you have to be getting the property significantly under market value. This is not the place to get into those details. I’m assuming you know when it makes sense to pull in a cash investor.
So now you know why you might target business owners as cash investors, as well as what’s in it for them. So now let’s talk about one way to get in touch with them.
Again, there are lots of different ways you might get your message in front of them. But today I’m just sharing one creative method with you.
Do you have a Sam’s Club store in your area? Well, as you probably know, they sell items wholesale for cheaper than you can get them at retail stores, and often the items are sold in bulk. Business owners often shop at Sam’s Club. It may be for office equipment, office supplies, software, or if they’re in the food service business, they may buy food and food-related accessories.
So Sam’s Club and similar wholesale stores can often attract a lot of business owners. However, they’re not solely for business owners. Often other people shop there too to save money by buying things in bulk. So how can you single out the business owners?
Well, at most Sam’s Club stores, there are different levels of membership. There is the regular membership and then there is a business membership. One of the benefits of being a business member is that there are special hours for business members when only business members can shop there and not regular members.
At my local Sam’s Club store, Monday through Friday from 7am to 10am only business members can get in. After 10, then it’s open to regular members. Then on Saturday it’s 7am – 9:30am. This is a nice benefit for business owners because they can get in early and do their shopping before their business opens for the day, and without having as many other shoppers in the way.
So how do you use this to your advantage? Well, one way would be to make flyers and put them on people’s windshields, under their windshield wiper so it doesn’t blow away. I’m sure you’ve had flyers on your car like this before. But here you have a targeted audience of business owners.
This doesn’t have to be expensive. You can make a simple black and white flyer and either print off a bunch of copies or take it to a print and copy shop and make some copies, which will often be about 5 cents per copy.
Just include a brief message about how you’re looking for cash investors for a real estate deal and what percentage they’ll get and how quickly and include your contact information. You’ll want to put the main focus on the benefit to them, which would be the ROI they’ll get. So you might use a headline that gets their attention like: “Cash Investors Wanted! Make 12% Per Year.”
Now, you might want to get permission from the store owner before doing this. You might also take note of whether anyone else is doing it. Last weekend I was at Sam’s Club and someone was walking around putting flyers on people’s windshields for a fast food restaurant. But I’ve never seen that before. If you don’t do it too often, they’re not likely to say anything. However, if you do it too often, people may start complaining to the manager and they may put a stop to it.
Another option is to talk to the manager/owner about setting up a table outside the exit with flyers and pass them out to people as they leave. I’ve seen various groups doing that. So that may be an option if the manager says it’s ok.
I mentioned that business members can get in during special hours, but that doesn’t necessarily mean that business owners aren’t going to be there at other times. There just won’t be as high of a concentration of them at other times. But if you have time, you could try at other times of the day as well or if you have a table or booth set up, you could potentially sit there all day.
If you’re going to go that route, though, and you have some income coming in from your investing, I’d suggest hiring someone else to sit out there and hand out the flyers since that’s not a very good use of your time. The same would be true of putting flyers on windshields. Unless you’re just starting out, you’d probably be better off paying somebody who’s looking for work a few bucks to pass them out. You could even offer them a bonus if you get a cash investor for your deals out of it. That would give them extra incentive to do a good job and not just throw the flyers in the trash or something.
Another option would be to put out bandit signs near the entrance/exit of the parking lot. The exit would probably be best, especially if there is a stop sign where people have to stop anyway.
I mentioned Sam’s Club as an example, but there are other wholesale stores as well and other types of businesses that primarily sell to business owners. You might think of some examples like office supply stores, sign-making shops, advertising agencies, etc. where the primary customer will be other businesses.
Granted, it’s not always going to be the business owner going into these places. Often they may hire someone to take care of shopping for them, but you will still catch some business owners this way.
So as I mentioned, business owners are just one group of people who could potentially be a source of cash investors, and this is just one way to reach them. If you enjoyed this article, please leave a comment and let me know and I may post some more articles about other ways to reach business owners, and also ways to reach other potential groups of cash investors. Even if you don’t use this particular method, hopefully it has got your creative juices flowing and has helped you to think of new ways to market your business.
Until next time, happy investing!
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