The Biggest Lessons I’ve Learned When Raising Money

The Biggest Lessons I’ve Learned When Raising Money

3 min read
Sterling White

Sterling White is a multifamily investor, specializing in value-add apartments in Indianapolis and other Midwestern markets. With just under a decade of experience in the real estate industry, Sterling was involved with the management of over $10MM in capital, which is deployed across a $18.9MM real estate portfolio made up of multifamily apartments. Through the company he founded, Sonder Investment Group, he owns just under 400 units.

Experience
Sterling is a seasoned real estate investor, philanthropist, speaker, host, mentor, and former world record attemptee, who was born and raised in Indianapolis. He is the author of the renowned book From Zero to 400 Units and the host of a phenomenal podcast, which hit the No. 1 spot on The Real Estate Experience Podcast‘s list of best shows in the investing category.

Living and breathing real estate since 2009, Sterling currently owns multiple businesses related to real estate, including Sterling White Enterprises, Sonder Investment Group, and other investment partnerships. Throughout the span of a decade, he has contributed to helping others become successful in the real estate industry. In addition, he has been directly involved with both buying and selling over 100 single family homes.

Sterling’s primary specialities include sales, marketing, crowdfunding, buy and hold investing, investment properties, and many more.

He was featured on the BiggerPockets Podcast episode #308 and has been contributing content to BiggerPockets since 2014, with over 200 posts on topics ranging from single family investing and apartment investing to mindset and scaling a business online. He has been featured on multiple other podcasts, too.

When he isn’t immersed in the real world, Sterling likes reading motivational books, including Maverick Mindset by Doug Hall, As a Man Thinketh by James Allen, and Sell or Be Sold by Grant Cardone.

As a thrill-seeker with an evident fear of heights, he somehow managed to jump off of a 65-foot cliff into deep water without flinching. (Okay, maybe a little bit…) Sterling is also an avid kale-eating traveller, but nothing is more important to him than family. His unusual habit is bird-watching, which he discovered he truly enjoyed during an Ornithology class from his college days.

Education
Sterling attended the University of Indianapolis.

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It can sound very simple to raise money online for multifamily real estate deals today. Capital is more accessible nowadays due to many investors chasing yields. Yet, capital raising processes can get messy and soak up a lot of your time. Here are some of the biggest lessons I’ve learned through raising money for multiple deals, and how to maximize the opportunity.

The Need for Systems

As with everything else in real estate transactions, investing, and keeping your finances straight, you’ve got to have systems for raising capital and managing investors.

Without good systems, it is going to be inefficient. You’ll struggle to keep money in order, provide the best investor updates, and services.

Related: 6 Questions to Ask If You Plan to Raise Money for Real Estate Deals

It may not sound efficient or appealing to create and document systems every time you do a task the first time in order to make to it simpler for delegating later. Yet, it is far more productive than spending far more time cleaning up mistakes, repeating live training, and trying to reorganize once you’ve got mountains of data to sort. Google Docs are great for documenting processes and the information can be easily shared with partners. Additionally, the service is completely free. Free is good!

Getting Commitments

Starting by getting soft commitments upfront can be a huge help. Sponsors should plan to get commitments for 100 percent of their funds from contacts they know in advance, before going public with a specific deal. This helps you avoid having scrambling to raise money once you have a deal under contract. What I’ve found out is that you have to get at least 10 percent over your needed funds to close on the money you need. For example; if your base raise is $10 million, get at least $11 million in commitments.

Keeping Everything in One Place

When you are raising capital from dozens, hundreds, or thousands of investors, you really need to keep everything in one place. Using half-a-dozen databases, real estate CRMs, accounting tools, and customer-facing portals can not only affect your productivity negatively, but can really hamper your ability to serve investors. It can also dramatically increase your risk of loss of data and mistakes.

Work to have everything in one place if possible. There are real estate software solutions that help with this process. Look for those with the best integrations and which bring together the most components, so you can consolidated data, costs and streamline workflow and keep down labor costs as well.

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The Need to Delegate

If you are going to raise money to complete more and bigger deals, you’ve got to learn to delegate.

Delegating should be the first choice in order to maximize ROI on time. As a sponsor, real estate syndicator, or CEO, you are expected to be the most diligent you can be with your time and overall organization’s performance. There have been plenty of CEOs and founders ousted from their own companies because they weren’t doing the best possible job. You have an obligation and responsibility to get the most out of your time, and resources available.

Related: 6 Aspects of Real Estate Investing You MUST Understand Before Your First Deal

Host Webinars

When you begin raising money from the crowd for real estate deals you can quickly find that it takes time. If you aren’t efficient you can spend months repeating the same information, holding meetings, giving presentations, and answering the same questions. That can take a lot of time away from doing actual deals, managing them, and getting the capital you have already raised to work.

Webinars have proven to be a great way to streamline this for me. You can get a couple hundred investors on one virtual meeting in one place and save weeks and weeks of time. Use them to present a business plan on a deal and process, give a quick overview of any deals you have on the table, and leave time open for a live Q&A session. The Q&A is the best part when it comes to providing value. You can really help convert investors, but also make your offering and service better. Just be prepared, because you will get drilled with questions by investors. They will not hold back.

Conclusion

Many of the above lessons I am still improving on to this day, especially the delegating on certain tasks.  

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I would love to hear others experiences and lessons learned.

Please comment below!

Here are some of the biggest lessons I’ve learned through raising money for multiple deals, and how to maximize the opportunity.