It Takes a Track Record to Raise Capital for Buying Real Estate

by |

The home was empty.  You know that look right?  There was a pile of old phone books on the porch.  A flyer for a housekeeper, landscaper and pool cleaner were dangling on the front door knob.  I peeked over the side gate and could see the pool had been drained.  The plaster was peeling off the sides.

Sure, you can drive through just about any neighborhood in the country today and find vacant houses.  But this was 2005.  The underlying mortgage on the home was only $77,000 – the market value $200,000.  Why was this house abandoned?  Why hadn’t the owner sold it?  She could have easily flipped it to an investor like me for $100,000.

With the few clicks of a mouse and a quick phone call I had my answer.  The owner, who was now living in Hebron, Indiana, could not sell the house and make a profit.  The Arizona Attorney General’s office had made sure of that.  They recorded a $125,000 lien against her back in 1993.

I made another quick phone call to the AG’s office and found out they’d be willing to release the lien for $25,000.  Problem solved.  With the lien released I could buy the house and give the owner a little cash too.

Unfortunately, time was not on my side.  The home was scheduled for auction the next day.  My only option was to fly out there and get the notarized deed and closing documents directly from the owner.  The closest airport was Chicago O’Hare.  I rented a car and met her in Hebron at a Holiday Inn Express just off the interstate.

I arrived back in Phoenix the following morning (the auction was at 2p) – reinstated the loan and recorded the deed.  Boy was that close.

I have lots of stories like this from my days as a bird dog.  I was just starting out in real estate back then working for a local investor.  He would travel to any zip code to put a deal together if it made him money.  What I’d discover later is that I could parlay these stories into a business of my own.  I was slowly developing a track record.

Around this same time my father-in-law, a retired IBM manager and successful real estate investor, came out for a visit.  He was curious why I wasn’t doing this real estate investing thing on my own.  I explained that I lacked the financial resources.  After analyzing the numbers on a few of my previous deals he decided to loan us some “love” money.

Of course, the numbers I provided made sense to my father-in-law.  But let’s face it – he was really investing out of love (presumably for my wife, not me).

I’ve found that’s how most entrepreneurs get their start.  A family member or friend will believe in you enough to front some cash.  If you make them money they’ll invest more.  And better yet, they’ll tell other friends and family about your business.  Sooner or later they’ll want a piece of the action too.

However, none of this happens without a track record.  Back then I used a simple Excel spreadsheet to track the numbers.  These days it’s Quickbooks with P&L statements and a balance sheet.  If a potential investor considers coming on board I send them to a password protected area of our website that has an up to date financial pro forma. 

A fancy business plan and highly produced website aren’t enough – you need a track record to raise private capital for buying real estate.

As for that vacant house I bought back in 2005 – I called one of our wholesale buyers to tell him about it just before I boarded in Chicago.  When I landed I had a voicemail from him.  He agreed to pay our asking price of $125,000. 

I shared my last 24 hours with the man sitting next to me on the plane ride back to Phoenix that day.   He asked if I was a real estate investor.  No, I said.  But I did stay at a Holiday Inn Express last night.

About Author

Marty (G+) is the Chief Financial Officer for Rising Sun Capital Group, LLC, a real estate investment firm based in Gilbert, AZ. His firm purchases homes at the courthouse steps and public REO auctions. They have two exit strategies, either fix and flip or seller financing.


  1. You’re such a great real estate investor. I really appreciate you article. Just with the use of spreadsheets that now become Quickbooks. Tracked the record, do the best and boom! Capital rose.

  2. Thank you for saying it “out loud”. I talk to a lot of beginning investors/bird dogs and they are all looking for private money. One of the things I tell them is that they should look, dress and act like they are able and willing to pay the money back. Yes, it nearly killed the old hippie in me to say, “Get a hair cut.” But if you are asking for money, you should look like a businessperson. Tracking numbers is another component of running your business properly. Amazingly enough, when you treat real estate like a business, it really does work.

  3. Most investors of course have a certain track record – at the same time the private lenders are loaning money more on the property than on the individuals. If they think the property is one they would like to own should problems arise and they have to take over – then they loan against the property.

    • Dale, I may not have made it very clear in my post but there’s a difference between equity investors and debt investors. I was specifially referring to having a track record to attract equity investors. It’s pretty easy, at least here in Phoenix, to find private money lenders for our deals. They could care less how much experience we have because they lend on the equity in the house.

  4. Great article! The biggest problem I face now in real estate investing is the lack of funds. I’m currently trying to get my mother on board with me. She has money making no interest in T bills or something like that. I have to work harder!

  5. That’s exactly what I’m trying to do right now- build a track record. My dad and I bought an investment property in 2009, using his credit and my work. He bought me out, netting me $15,000 profit and a $35,000 loan. I’ve used that money to buy two houses in Phoenix, and I’m working on my third. I’m making sure each deal is great and will contribute to gaining a good reputation. Once I’ve proven myself, I’m pretty sure other family members will want to invest in me, too. It’s a slow process, but I confident I’ll get there.

    Great articles, Marty, and you’re in Arizona. I’d like to meet up some time and talk real estate with you. I’m planning on going to Phoenix in June.

    • Mathew, that’s awesome. Many new investors suffer from analysis paralysis. They’re constantly getting ready to get ready. It takes time and patience to develop a track record. Once you have it you’ll be surprised how much faster the investment capital will come in. You can reach me at 602-319-5391 if you want to talk shop. I hope to see you in June. Thanks for reading.

Leave A Reply

Pair a profile with your post!

Create a Free Account


Log In Here