Raising Capital ideas

[Tyler Morrison]

I am currently putting together a deal on a 4-plex in my area that I found about a month ago.  Its a solid deal that involves finding a capital partner for the ~$150-200k down payment and someone with good credit to purchase the rest of the investment through the bank.  I found parties necessary and am now proceeding down the purchasing path.

Owning a moving company, its no secret that I want to enter into the Self Storage industry.  While networking a couple months back, I made a great contact and asked him to call me if they ever needed anything.  I recently got a call from him giving me what looks like some pretty good terms on a deal worth about $6-6.8M.  The terms are; raise $2M for the down payment on the property and in exchange that investor will own 75% of the property.  I will receive a couple of ownership percentage points in exchange for putting this deal together.  I have a couple of interested parties but know that they do not have Millions in savings.  People I do know with Millions laying around either don't take my calls regularly or take a couple of weeks to set up a meeting.  I'm wondering how people would go about increasing the network of wealth around you quickly?  I can and will certainly increase the network of wealth around me over time but am trying to do it quickly to set this self Storage deal up quickly.

[Michael Wagner]

Kudos for thinking big.  I love it!  And please don't hear this as discouragement but raising money for a $6 Million purchase is a big elephant...especially if it is your first foray into an industry.  That doesn't mean it can't be done but if I were you I would also have my eyes on some more "approachable" deals.  There is tons of opportunity in the $300-800K range and doing a couple smaller deals will allow you to establish a track record which ill attract the bigger money down the road.  I started out with a $330K property (since sold for $1.8 Million after some expansion) that I raised $60K in private funds for. After a couple deals like that, I not only have the cash to buy into bigger properties, but I've also found that BIG money starts seeking you out.  I put in $5K on a $500K purchase last year and raised the remaining $495K privately via my network. Since then, I've been approached by a couple Fund Managers asking how I would respond if they told me they wanted me to spend $5-20 Million. Granted asking how I would respond and asking if I'd actually do it are two different things but it does, I think demonstrate what I am getting at here.  I have a friend who experienced something very similar in the SS space as well. AGAIN, I'm not saying you can't raise $2 Million for your first rodeo...I just think the path above might be a more "probably" path to success.