Real Estate Fundraising: How Much To Budget for Marketing
How much should promoters budget for marketing when fundraising for real estate?
Many real estate investors, CEOs, and project organizers don’t think about budgeting much for marketing when they go out to raise money. After all, they are raising money because they need or want more of it. However, do they need to be budgeting more for this? And if so; how much?
Raising Money for Nothing
Little and no money down real estate deals can work if you know what you are doing and have invested in your education. In fact, the most sophisticated, experienced, and wealthy investors stick to little or no money down of their own as a rule of thumb. Understand what you are asking. Whether you are putting some of your own money into a deal or not, newer property investors are often asking for a lot of money, without having a whole lot themselves.
Many would argue that it takes money to make money. The same could be applied to raising money too. But there are low cost and what are seen as ‘free’ ways to use other people’s money and gain leverage. They include:
- Using mortgages and lines of credit
- Direct Peer-to-Peer lending websites
- In person presentations
In one way or another, there are costs to these sources. It may just be loan application fees or points, but at least in the case of many presentations there will be marketing costs of one form or another too.
The Costs of Raising Money via Presentations
In person presentations are seen as a very effective and affordable method of raising private money for real estate deals and businesses. They can be made to friends, family, and neighbors around the kitchen table. No matter which channel is involved, and who it is, most will want to be armed with some form of marketing, branding, prospectus, or presentation materials. So what might you need?
Items real estate investors may use include:
- Printed presentations covering the proposal
- PowerPoint presentations or pitch decks
- A real estate / project website
- Business cards
- Logo and branding materials
- iPads for presenting
All of these items have to be created, and that may include hiring a freelancer writer and designer to help. What about gas money, entry costs, and food and drink money? These costs don’t have to be huge, but they shouldn’t catch you off guard.
Setting Up the Presentation
Savvy real estate marketers and fundraisers will tee up their presentations and pitches. Done right, all the heavy lifting and convincing will have been done in advance. With the right branding, visibility, and positioning, the close is virtually sealed before the actual presentation happens. This can include some of the elements from above, as well as formalizing a company, press releases, content marketing, and email marketing. Some may see this as an extra step, but it can pay off big time.
What about Real Estate Crowdfunding
Pretty much all fundraising for real estate is a type of crowdfunding. It’s bringing together ‘the crowd’ to make something happen. This can be called partnerships, joint ventures, real estate syndications, accomplished through a fund or LLC, or via crowdfunding platforms online. Recent regulations falling under the JOBS Act have sparked a lot of buzz online. However, a lot of this information is misleading in how easy it makes it sound. It is still necessary to seek legal counsel, get appropriate permits or approvals, and get accounting help.
In many cases, as with online crowdfunding portals, real estate investors and project organizers have to anticipate marketing. That means having a marketing strategy, plan, and budget. Even this type of fundraising requires an investment. If you are trying to raise $1M, $5M, or $50M; expect to invest an appropriate and reasonable amount in promotion.
Some of the marketing strategies and tactics this might be invested in, include:
- Graphics and infographics
- Crowdfunding campaign pages
- Social media marketing
- Press releases
- Blogs and blog outreach
- Article marketing
- PPC ads
- Email marketing
- Cold calling
- Direct mail
Other items to budget for a reserves to ensure the campaign can be executed on, even if the unexpected happens, and to keep updating contacts in a valuable and engaging way. This can be critical for keeping them in the game, and for setting up following raises and campaigns.
There is millions in capital to be raised for big and small real estate deals. Low and no money real estate deals can be done, but in many cases investors will want to budget and plan for marketing and promotion to maximize the opportunities. Don’t let these expenses catch you off guard.