When I was growing up, my grandparents lived in the mountains outside of a small, rural northern California town, far removed from the comforts of modern city living. They had electricity, but there was no city water or sewer out there, not even phone lines. Communication with the outside world was achieved via two-way radio. A well and septic system provided for the essentials.

But my grandparents’ well wasn’t all that deep, and the water wasn’t all that plentiful. The necessity of turning water on and off during showers taught me an important lesson about the conservation of limited resources! Despite being conservative with usage, by the end of summer, there were times when only sludge would come out of the tap.

But after a few years, they had a second, deeper well drilled. From then on, worrying about running out of water was a thing of the past.

How Deep is Your Well?

Those of you growing your real estate businesses already know that it requires a lot of capital. And unless you were fortunate enough to have started with a lot of wealth, you know that having access to the capital of others is essential if you are trying to scale. You need to have a base of investors, and continuously grow it.

Recently I was invited to speak at a large real estate summit attended by hundreds of experienced and aspiring real estate investors. Prior to going on stage, the organizer asked me what it was that I most needed in order to grow my business. He was very surprised by my answer: “More investors.”

“But you’ve closed $50 million in real estate and raised over $25 million in the past year! Why would you need more investors?” he asked with an obvious hint of surprise.

“Because I just raised $25 million!”

A pool of investors is just like my grandparents’ well. If you keep using it, the water will dry up. You need to dig more wells—and deeper ones, as you grow.

Related: Where Do You Find Your Investors? Here’s Exactly Where I Find Mine…

Which Comes First, the Chicken or the Egg?

The classic “chicken and egg” scenario in real estate investing applies to the question of what comes first, the deal or the money? Just like you wouldn’t go to the grocery store without your wallet, shopping for real estate without the money to buy it doesn’t make sense.

But by now you’ve heard the phrase, “Find the deal and the money will follow.” Surely everyone saying that can’t be wrong, right?

I’ve got bad news for you—they are. And it won’t.

But there is also good news. Securities laws are very specific about how you solicit investors for your deal. But if you have no deal, the only thing you are soliciting is yourself, your ability, and your dream. What better time to build those “pre-existing relationships” than when you have no offering to solicit? It certainly reduces the risk of running afoul with the law.

How to Get Money Without a Deal

Looking for investors—digging those wells—happens by talking about what you do, how you do it, what results you’ve produced, and what results you expect. If you’ve never raised money before, forget about pitching your…