Sep 12, 2023

The Advanced Guide to Real Estate Syndication Pitch Books

TJ Lokboj
The Advanced Guide to Real Estate Syndication Pitch Books

Pitch books play an extremely important role in the world of real estate syndication. A real estate syndication pitch book will often be the only opportunity that a sponsor has to communicate with potential investors. The words, styles, and formats that you choose for the real estate syndication pitchbook will all play a crucial role.

Real estate syndication pitchbook - SyndicationPro

If you have never created a real estate syndication pitch book from scratch, you might not know where, exactly, is the best place to begin. The pitch book best practices that will apply to your firm will depend on the kind of project you hope to raise funds for, the general nature of your company, as well as your target investor.

However, there are still many things you can do to improve the quality of your upcoming real estate pitch book. Below, we will discuss eight keys to creating the perfect real estate pitch book. By keeping these useful tips in mind, you can attract new investors and raise the critical capital that you need.

Create the Pitchbook with a Clearly Defined Purpose

With a real estate syndication pitch book, you’re not just broadly pitching your company. You are pitching a specific project. You’ll need to do much more than simply point out projects you’ve been successful with in the past; you’ll need to clearly demonstrate why investors should allocate their limited capital to your specific project.

In other words, it is crucial to realize that you are pitching a specific investment. This means you’ll need to create a unique value proposition demonstrating not just why the proposed project is good, in general, but also the best possible place for allocating any surplus funds. Keeping this goal in mind, choosing the remaining components of the pitch book should be a bit easier.

Identify Your Target Investor

In order to maximize the value of your pitchbook, you will need to clearly determine who, exactly, you are pitching to. Usually, this means investors, but “investor” is still a very broad term. A good customer avatar will make it easy to zone in on a very specific group, which will ultimately help you use your limited resources much more efficiently.

What do you expect your typical investor’s net worth to be? What is the minimum investment? Where do they live, what kind of job do they do, what is their typical risk tolerance, and what do their investment selections typically look like? Being able to effectively answer these questions will help make it much easier to narrow your search.

Be Able to Describe what Makes Your Company Unique

As a real estate syndicate sponsor, the burden is on you to distinguish your pitch from the many other alternatives currently available. Sure, you might know what makes your company great—and you’ve probably even contributed a great deal of capital of your own—but that doesn’t mean every prospective investor will view it in the same light.

There are many ways to distinguish yourself from your competitors. Promising a high rate of return or a desirable equity structure will be the easiest way to gain an edge, but you will also need the branding elements and experience that can make these promises believable. Investing in a unique asset class, a desirable location, or other points of distinction can also help.

Prioritize the Executive Summary

While it’d be nice to believe that every investor reads every pitch book that comes across their desk, this is very rarely the case. Many investors will receive hundreds, even thousands of pitch books (or pitch book equivalents) each year, which is why the books are often given a very brief glance.

If they are going to read anything, it will probably be the executive summary. Using a few bullet points to highlight the best components of your project will give you an opportunity to set yourself apart and possibly convince them to continue reading more.

Use Real Numbers

In real estate pitch books, positive terminology like “high return”, “promising location”, “potential for growth”, and others will be very helpful. But investing is a numbers game and, naturally, any serious investor is going to want to see some tangible data.

Expected returns, future payout timelines, equity rights, projected expenses, and projected revenues will all need hard numbers, supported by good data. Creating multiple projections—a likely scenario, a best-case scenario, and a worst-case scenario—will also help paint a fuller picture.

Be Willing to Invest in the Visuals

Real estate sponsors are very finance-oriented people, which is why some things that don’t create an immediate return—like investing in graphic design—can be easily overlooked. However, given the fact most investors will only spend a few minutes looking at pitchbooks, investing in elements that attract their attention will usually pay off.

Developing a graphically appealing pitch book will be very beneficial. Coordinated themes, a quality logo, and other visual appeals (even things like fonts) will be crucial. Investors will take note that you were willing to invest in these elements, which might even reflect the kind of care you would put into a property.

Include Detailed Financials

Beyond the hard numbers and projections, you’ve already provided, your real estate syndication pitch book should be able to answer whatever financial questions your investors might have. Being able to preemptively answer these questions will not only calm their nerves but will also demonstrate you’ve put a lot of thought into the project.

Your pitch book should identify possible lending and capital partners, explain what your business would do in the event of financing issues, and include whatever disclaimers might be needed. It is much better to show your business has thought about possible financial challenges than it is to act as if nothing could possibly go wrong.

Don’t Be Afraid to Get Help

In an effort to save money or maintain control, some real estate syndicates will try to create all pitch books entirely in-house. However, unless you have a team that has created every component of a pitch book in the past, it is probably a good idea to get some outside help.

Luckily, new hiring platforms and other digital options make it easier than ever to hire people for a single task. And once you have put in the effort to build a quality team around you, creating future pitch books should require much less coordination.

Pitchbooks are the lifeblood of the real estate syndicate industry. Rather than sprinting straight to the finish line, be sure to give your pitchbook the care and attention it needs. Using SyndicationPro and other related tools can also significantly help.

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