One very important thing I teach my students is how to handle investor rejection. You see, not all investors will be interested in your deal. Each one is different. Everybody—husband, wife, family—has his or her own varying degrees of risk tolerance and experience from the previous investments they have made. Have they lost money? Have they made money? Their prior experiences in investing shape their attitudes toward the kind of risks will they are willing to take.
You should remember this, though: They are not really rejecting you. When they say, “I am not interested in your deal,” they are not rejecting you but instead saying this situation is not right for them from a financial standpoint. So, don’t take it personally at all.
They may not be in a position to invest just yet. Or maybe they are not yet sold on the benefits and the returns. Or maybe they don’t have the confidence in your projections that you are showing them for the next three to five years or three to seven years.
Investors are skeptical by nature. You need to keep that in mind, because it’s their hard-earned money that they are investing with you in the syndication deal, and that money will be tied up from 3 to 7 years. That’s a lot of time to tie up that much money—$50,000 or $100,000-$200,000-$300,000. They want to be sure an investment with that money is going to give them the kind of returns that you are talking about.
So, you need to find out what their concerns are, then answer them and explain the numbers and benefits.
For instance: Why have you chosen this particular emerging market as the one for this deal? You need to be able to provide back-up data and statistics. Be detailed!
As you try to identify the reasons for rejection, keep in mind that one rejection is not as significant—or alarming—as a collection of rejections is.
When you encounter repeated rejections, that means you have not really covered all the important points in your presentation. You may be knowledgeable, but have you relayed your knowledge in such a way that the potential investors understand what you are saying?
Don’t put them on the defensive or argue with them. That will only ensure you have lost their interest in investing with you.
Ask for the reasons for their rejection, but also be aware that they have no legal obligation to tell you the truth. Make sure you are getting reliable feedback. You want to try to find what the real reason is why they are not able to invest with you in your deal.
Because they are looking at giving you their hard-earned money for retirement, they want to be sure you are the right person. They likely are being approached by many other investors in addition to yourself. So, it is important for you to convince them they should choose to invest with you. Where you can really overcome rejection is by showing them how your deal is different from the others.
Consider the following:
As I said, the investor community is quite savvy, so give them credit for that and encourage them to ask questions. Listen to them—and shut up! Let them talk, and you listen and read between the lines so you can ascertain their concerns and put them at ease.
“Slow down to speed up” is what I always tell my team. You have to start slowly. Because if you are really running and gunning and speeding up and talking so fast that investors don’t understand—guess what? They will come away with lots more questions than answers. Don’t confuse them; confused investors never invest. And it is hard to take away the confusion once it has been established.
Don’t appear desperate. When investors “smell” desperation on your part, it makes them uneasy. If they feel you are too desperate, they will wonder why you are trying to push them so hard to invest money. And that will actually cause them to back away from you and your deals.
They need to be sold on what you are presenting them, which is why we are so transparent in our deals. We show our investors the whole syndication package—the PPM, the Operating Agreement, the Subscription Booklet, the Property Investment Brochure—all financial data, occupancy, and much more. We encourage them to show all these to their attorneys and CPAs so they will be confident that, yes, this is a good deal.
When they are 100%, totally sold on your investment then they won’t reject you. I promise, they won’t. So, make sure you have an airtight syndication package, present it slowly and in detail, and confidently address investors’ concerns. Then you have a much better chance of winning them over.
Vinney Chopra is the Founder and CEO of Moneil Investment Group and President of Ideal Investments Group. Since coming to the United States more than 40 years ago - with only $7 in his pockets - he has built four successful businesses as well as his passions: a multifamily syndication academy and youth academy. With a bachelor's degree in mechanical engineering, he added a master's degree in business administration in marketing from The George Washington University, shifting his focus to marketing and motivation. He has been a professional fundraising consultant and motivational speaker for more than 35 years and also is a licensed real estate broker in California. Vinney and his wife started their real estate investments in 1983. He currently owns single-family homes and multifamily units in Texas, California, Atlanta, Arizona and India. People often call him “Mr. Enthusiasm” or “Mr. Smiles” for his positive attitude and commitment to bringing great value to everyone whose lives he touches.