Andrew Lucas, Director of Capital Markets at Trion Properties
I am very happy to introduce you to Andrew Lucas, who is Trion Property's Director of Capital Markets and with whom I have recently had the great pleasure of working to build an 'Investor Acquisition System.'
What you're going to learn from Andrew today, who is at the sharp edge of investor relations at Trion, is how automating the early stages of the process can double the investor intake rate by reducing the time it takes to convert a prospect to being an investor by half.
Andrew also reveals some secret tactics he has used to find investors so tune in and learn how he has helped Trion grow to being one of the largest and best respected multi-family shops in the West.
What You're Going to Learn
How an Online Digital Presence Moves Real Estate Investors Further Down the Sales Process
Why Real Estate Investors Who Come By Way of Referral Are the Best Leads of All
Why the Goal Is to Educate About Investing in Private Real Estate
Exploring an Email System that Will Keep Your Real Estate Investors Engaged
What the Lifecycle of a Prospect Looks Like Before They Become an Investor
Three FAQs Prospects Ask Before Investing in Real Estate
Why It's Harder to Raise Money for a Real Estate Fund than Individual Deals
The Secret Sauce in Building Great Real Estate Deals Online
Proper Tracking Tactics for Online Real Estate Investor Leads
Online Digital Presence Moves Real Estate Investors Further Down the Sales Process
Adam Gower: Alright, so you move over to Trion. And it's getting close to two years ago that I started working with you guys, building out the digital presence, the online presence and the marketing. So, one of the things that you have said to me is that now when you speak to somebody, they are, and I'm quoting you if you don't mind me doing that, more advanced in the sales process. So tell me what that means in the context of life before having a solid digital presence and after.
Andrew Lucas: We were fortunate enough to work with you starting two years ago. What I mean when I say that is, when I speak to somebody now for the first or second time, usually they will have seen communication from us. It's almost to automate the education process. So every time somebody wants to get a piece of information on Trion or learn about our investment opportunities, they don't require a warm voice to walk them through that. So, when I do become that warm voice on the other side of the phone, most often they may have received three or four educational pieces on us explaining what a gross rental multiplier is or what the tax benefits of investing in real estate are and then if they receive that communication, then they may go to our website and read about our company. So, what are the benefits of implementing a program like we did with you is: when somebody first decides they want to invest in real estate they're at zero percent. When they decide to make the decision, they're at 100%. My first interaction with them since implementing a robust investor communication system is, when I have my first warm touch with them, as opposed to them being 1-10%, they may be at 50%. So they still do want that personal interaction. They want to make sure I'm responsive. If they call me, I'll call them back or if they want to walk through a deal that we'll be here and be responsive to them, but, that initial information gathering, they're further down the line.
Real Estate Investors Who Come By Way of Referral Are the Best Leads of All
Adam Gower: And in the course of your time at Trion, I know you guys have done a lot of crowdfunding both directly and also on some of the platforms. Have you seen investors actually invest without a direct interaction, without a personal interaction with anybody?
Andrew Lucas: It has happened. Oftentimes the people that need the least handholding are oftentimes recommended to us by long term investors. So Adam, if one of your good friends is like, "I've invested in six deals with this company. They've made me money, I want to introduce you to them." In that scenario you may need less formal interaction than you would if you just click on a Google ad and you don't know this company from anybody else. So, I think usually our warm referrals are probably a little less skeptical just because they know people that we've done well by. But if you're googling a company and a real estate investing ad comes up, chances are you may want to do a little more research.
Adam Gower: That's a bit different. Exactly. Well, a Facebook ad.
Andrew Lucas: Exactly.
Adam Gower: I just ran a Facebook campaign and believe it or not, we did actually get investors who went all the way through and invested, within four weeks. I mean, really crazy velocity.
The Goal Is to Educate About Investing in Private Real Estate
Adam Gower: But let me ask you this: so with those people who come through a referral, obviously a referral is always good but to what extent do you find the extent to which you have educational materials on your website, that you have videos on your website, that LinkedIn, Twitter, Facebook, etcetera, if they go to your feed and I know it's slowed down a little bit over the last few months but if they go to your feed, they see this velocity of information that's out there, does that also help do you think, in the sense that somebody said, "Oh, yeah, thanks for the introduction to Trion." What do they do? The first thing they're going to do is they're going to go online and they're going to research you .
Andrew Lucas: All of that helps. Basically, anything that you can put in there to validate you as a company, it doesn't hurt. It all helps. And I think some of the stuff that we've tried to do as well is, when I first started Trion – and obviously we've grown as a company. We've become much more, I would say, institutional in our approach and our scale — but one of the things that we wanted to do as well is, every time we sent out an email, we didn't want it to be, "Hey, do you want to invest with us?" We really tried to build out an education platform. So, if you go to our website now, you'll see some videos, a lot of articles about real estate investing that aren't meant to sell you to invest with us, but are meant to educate you on investing in private real estate. So, when there is an opportunity to invest, our network will be better informed.
An Email System that Will Keep Your Real Estate Investors Engaged
Adam Gower: And then when you do have those conversations with people for the first time, you said that they're more advanced in the sales process. But do you find the number of times that you have to manually communicate with them on the phone or in person is fewer? Are they easier to close? Let's put it that way.
Andrew Lucas: I guess everybody's different. I'll tell you what it does, it creates a funnel without having to manually work. I've had investors reach out, fill out our 'Contact Me' form on our website, and I'll go into our ConvertKit account, which is the email system that we use and I'll look at them and I'll see that they've received 70 emails from us. And they didn't open the first 20 emails, but then the last 40 emails, they've opened every single email. So while I don't know who this person is when they initially fill out that form, having that communication, that email system in place has kept them engaged. If they've opened 40 of our emails and you know they've probably clicked on our website and read about potentially who I am, who Max and Mitch, the two founders are, looked at our strategy. So, it's really about trying to build that lead funnel. How are you getting interested people into your universe? Then number two, once you get them into your universe, how can you provide value to them? Ultimately, getting somebody into that funnel and then getting them comfortable to invest with us — if we just send emails saying invest, invest, invest, that's not going to work. You want to provide value to them in any way you can, whether that's a video on a deal or educational content or inviting them to a webinar. We want to provide value. And even if it's somebody that doesn't end up investing, but they are engaged with us, that's a win for us as well, because they may tell somebody else.
Adam Gower: You know, it's interesting you say that. This is something that we dealt with, wasn't it. You've referred to it now as this idea of — I'm going to put a little bit of words in your mouth — but you basically talked about the difference between cold and warm leads. What I mean by that is the way that they are categorized inside an auto-responding email system. So, you might have a list of people who have not interacted with emails over a long period of time. It might be a year. And the question is, do we continue to contact these folks? Do we continue to send them emails? And then what you've told me in the past is, yes, we need to do that because they might not invest in the first deal that you have available. They might not invest in the second, the third or the fourth. They might show up just at a certain time in their life and because you've been there, you're the one that they'll invest with.
The Lifecycle of a Prospect Before They Become an Investor
Adam Gower: I remember you pontificating one day and saying, "Yeah, you know what, this guy invested and he's been on the list for four years and hasn't done anything." Guys from ages ago. Talk about that note I wrote down to ask you specifically is the lifecycle of a prospect before they become an investor. Tell me what you've seen. How do accredited investors actually make those decisions?
Andrew Lucas: It really does span the spectrum. I had an investor recently, since they started getting emails from us, they were waiting to see a deal that we had initially sent out, come full circle. So, they wanted to see a deal that they cataloged the, "Hey, invest in this deal. We're expecting a 16% return." And they wanted to see the exit email four years later, prior to making an investment decision. And then, you compare that with...we partnered with a couple of people that run a doctor investment blog for real estate investing and he recommended one of our deals recently — and it is a strong deal, we're very confident in it. But I mean, literally, as soon as he recommended it, I just had people filling out subscription documents, filling out subscription documents, that I've never even spoken to. The doctor himself is an investor of ours so he's very comfortable with us. But they, in that scenario, they have so much faith in him. And he's a smart guy, he's recommended a good deal. But, they had that trust level to move pretty quickly. So, it spans the spectrum and I would say, people have their different pain points for what motivates them. Some real real estate people want to look at the actual deal. They want to look at the PPM, the financial projections, whereas I would say more of your accredited investor that's probably intelligent because they've been successful. They've made some money and had success. But, they're not going to pick out the nitty gritty between your year two and three growth assumptions and that's going to make them invest or not. It's more of a comfort level with the sponsor. When you invest in a deal, you invest in a sponsor as much as the real estate because you can have a Class "A" property on Rodeo Drive in Beverly Hills and if the sponsor doesn't know what they're doing, it doesn't matter where that real estate is or how pretty the building is.
Three FAQs Prospects Ask Before Investing in Real Estate
Adam Gower: What are the most frequently asked questions. The top three most frequently asked questions, of investors, during the conversion process? And I'm talking about people who are currently prospects before they become an investor, not prior investors.
Andrew Lucas: Have you ever lost anyone's money? How much do your partners invest in your deals? And when do distributions start? If I just pick those on the top of my head, if they're not the most three, those are three that we get very frequently.
Adam Gower: Of course that's something that should go into the initial sequence of emails, when someone signs up then. Here's our FAQs, here's the answers.
Andrew Lucas: Yeah, that saves me a lot of time.
Adam Gower: I'm quite serious about that.
Harder to Raise Money for a Real Estate Fund than Individual Deals
Adam Gower: We also worked on two different perspectives, didn't we? The fund and also individual deals. It's harder to raise money for a fund than it is for individual deals. Tell me a little about why you think that's the case.
Andrew Lucas: Yeah, that's kind of one of the constant back and forths we have as a company. Real estate, by nature, is just a deal-driven industry. People like looking at deals, looking at the financials, looking at the appraisal. We as a company, in 2016, launched our first fund. And our investor base, so we have about 500 active investors currently and that consists from people investing as little as $50,000 up to...we have institutions with 20 million dollars with us. But, the overwhelming majority of our investor base is your high-net worth individual that's investing anywhere from fifty to $500,000. We launched our fund in 2016, our first fund, we're now on our second fund, for really two reasons. Number one, a lot of our investor base, they're smart people, they want exposure to high growth commercial real estate, but, they'll be the first one to tell you that they don't have the expertise to pick deal X in San Leandro versus deal Y in Beaverton versus a deal in Hayward, California. So number one, by moving to a fund, not exclusively moving to it, but by offering the fund model, we offer our high-net worth investors the ability to basically spread their investments over a pool of 8-12 properties in diverse geographic locations. So, number one, it immediately lessens their risk because it's naturally diversified. And then number two, for us as a company, we're buying a deal with a $12 million equity check. Raising that and collecting $150-$100,000 checks is just very cumbersome.
Secret Sauce in Building Great Real Estate Deals Online
Adam Gower: When you moved to the online world, as you saw Trion did, was there a concern that somehow your secret sauce. I hear this occasionally, "Oh, I don't want to share how we do it, our secret sauce, with all these people. Five hundred people we're sending detailed information to." Pro formas, analytics, etcetera, etcetera. How do you react to somebody, a sponsor, who is concerned about that? How did you deal with that?
Andrew Lucas: We're pretty much an open book. I manage our CRM and we use Juniper Square. We get quite a few sponsors that try to get access to our investor information, to see what we're up to and we've never had a problem sharing information. It's no secret as to what we're doing. We're trying to generate new investment leads. We're trying to nurture them. We're trying to buy great real estate deals and ultimately build our acquisitions pipeline and build our investor base like that. It's just no secret as to what we're doing. Hopefully we can do it better than...and I'm not saying we're doing it the best, because I know there are some other groups that are doing it really well. But hopefully we can do it as well or better than the competition.
Adam Gower: Exactly right. It's no secret, it's just how well you do it. You could lay it out and somebody still wouldn't be able to execute in the same way.
Tracking Online Real Estate Investor Leads
Adam Gower: And now we're talking about the online world. So personally, what's been the hardest lesson you've learned online?
Andrew Lucas: That's an interesting question. I think for us it's, what is the best way to generate warm leads via the internet. I feel like we're finally...we've been constantly improving it. I feel like we're finally getting to the point where we're really going to hopefully get it dialed in. You can spend a lot of money on internet marketing, and if you're not doing it well, you won't see a lot of results. So, I think one of the hardest things for us is really to make it efficient, make it effective. And number two, get the tracking systems in place so we know exactly what we're converting versus what we're spending. One of the difficulties of that, as we discussed it earlier, we can get a great lead and they may not invest for four years so, you constantly want to be evaluating what your NOI is, spend versus conversions, but one of the challenges of that is not every future investor is going to invest in the same quarter that they click on your pop-up ad.
