What's the best way to raise $1M+?

12 Replies

Been in real estate for over 3 years. I've been sourcing mobile home park deals with my business partner for last year. We've closed about $13M in deals this past year but using other operators. In other words, we are looking to source our own capital instead of relying on established operators to get deals done. We want to be the GP. 

We have a few good size opportunities coming up where we would need several million dollars. 

Interested to hear from those that participate in large capital raising. 

What did you find useful? If you were to do it again, how would you do it differently?

About a year ago, my business partner and I set out to raise $20 million for our commercial fund.  It was difficult and exhausting in every way.  It drained us.  

We didn't raise that much.  We only hit $3.5ish.  We are operational and really moving.

Here's what I learned:

1.  Talk to everyone.  If they don't have it, who do they know?

2.  There will be lots of No's and that's okay.

3.  A good deal will attract ears; a great deal will attract investors.

4.  Ask for the moon, because they have the moon to give.

Best of luck to you on your journey.

@Ian Tudor , I strongly recommend that you connect with @David Thompson .  He has had tremendous success in a short time period raising capital for syndicated value-add multifamily projects in Texas.  When I was in your position, I connected with him and he offered valuable advice and recommendations on how to get started with raising large sums.  Check out his blog posts and podcast interviews.  I think you will find useful tips and advice on how to get started raising capital.

you may want to talk to some of the crowdfunding sites..

your experience and financial position will be important .

In my mind if your doing your first deals you need to give the money much more return than what you want to subsequently end up with.. why because you need experience and you need deals to show others that you have done deals.

remember 8% pre with a waterfall there are literally 100's of very established syndicators that will do this .

you offer substantially more and the investors many times will take the risk adjusted return and go with you as you start out.

Ian

@Jay Hinrichs offers some sound advice around experience and what investors and lenders will be looking for.  I don't really advice on the crowdfunding way because you won't be developing your direct relationships w/your investor base that is critical for long term success, it becomes a crutch IMO.  Plus, they will be looking for the same experience that you may not have anyway.  You want to own those direct relationships, you will have more power and control over the long term.   Lots to share but here's a couple articles below that might help.  

MHP is a very interesting area and has people's attention but its also a new area for a lot of investors so education and partnering w/experienced folks in MHP will be beneficial especially early in your growth.

https://www.biggerpockets.com/blogs/9145/67627-rai...

https://www.biggerpockets.com/blogs/9145/64341-my-...

https://www.biggerpockets.com/blogs/9145/53037-1m-...

@David Thompson   some of the crowdfunding sites let you get into direct contact with the investors.

But with all the fall out form POL and a few other flame outs.. your absolutely correct any crowdfunding site that does not do major due diligence on a sponsor is going to be hard to find.. they don't want their credibility shot by referring folks that are new or under capitalized to begin with.

One syndicator I know personally had some funds raised through I funding I think it was that went banko and now they are in direct contact with the investors and can play the roll of savior.. as others in I funding deals are going to run the gambit of loss of interest to loss of principal to total wipe outs like the Milwaukee fiasco that started it all for those boys.

I think Joe Fairless would be a good one as well.. as I seem to think he started a few years ago with his first one and has done a few more in the mean time.. not sure if he has taken any cradle to grave yet.. but that is one person to talk to.. I think him having his pod cast like he does is a big help as well.

Good advice from above. Make sure to talk to a securities/corporate attorney as well to structure file the appropriate paperwork. Last thing you want is a sec and civil action.

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As @Jay Hinrichs said, you need to be different. The groups I work for are now offering 12% pref and trying to aim for returns in high teens while providing full guarantees on the loans. You need to be willing to take less initially from your end.

@Jimmy Klein   is that full gurantee on the 12% pref?  or just the underlying loans ?

those are pretty tall hurdles to get over... caution would be my thought..

not a lot of room if it does not quite go right.  Just saying.

Originally posted by @Jay Hinrichs :

@Jimmy Klein  is that full gurantee on the 12% pref?  or just the underlying loans ?

those are pretty tall hurdles to get over... caution would be my thought..

not a lot of room if it does not quite go right.  Just saying.

 Hahaha, no just underlying loans. Regarding the hurdles, I was referring to hotel deals, so 12% is fairly achievable in the industry. 

@Jimmy Klein   gotcha  pretty tough in multi to hit a 12% pref..

@Spencer Taylor - I love number 3. Makes sense. My business partner has reached out to about 50 people in the past 48 hours and that rings true. 

@John Jacobus - Thanks bud. Will do.

@Jay Hinrichs - Which crowdfunding sites are you referring to? I coordinated a conference with three large crowdfunding platforms last year and none of them were open to MHPs. They might have changed since then. Experience was big for them. I have two years and the conversation was a non-starter.

@David Thompson - Thanks will read tonight.

@Monique Rene Coates - Thanks! I will check out!

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