Bronx, NY · Member since 2014 · 10 posts · 0 votes
I'm looking to raise capital for an apartment building I'd like to purchase in return giving a way equity to the investors. Can anyone give insight on how to locate potential investor? Any great books covering the subject?
Investor · Round Rock, TX · Member since 2010 · 8k+ posts · 4k+ votes
11y
There really aren't any good books on the subject. Sam Freshman's book here:
Principles of Real Estate Syndication
is a decent introduction. The best way to learn is by doing and getting someone experienced in the business to show you how it works. Find out a way to provide value for someone like this and learn by doing.
Investor · Round Rock, TX · Member since 2010 · 8k+ posts · 4k+ votes
11y
There really aren't any good books on the subject. Sam Freshman's book here:
Principles of Real Estate Syndication
is a decent introduction. The best way to learn is by doing and getting someone experienced in the business to show you how it works. Find out a way to provide value for someone like this and learn by doing.
Real Estate Consultant · Camarillo, CA · Member since 2010 · 2k+ posts · 1k+ votes
11y
I strongly agree with @Bryan Hancockon working with someone that is doing it. I also do a lot of networking and talk to many people. I tell them what I do and if they show interest, I set up another appointment to further discuss their interest. Building your credibility is important. Working with an experienced syndicator can help speed up establishing credibility.
Rental Property Investor · Los Angeles, CA · Member since 2014 · 120 posts · 88 votes
11y
You also need to show them something along the lines of results. I have found that if you've done even something small, doing a nice writeup in powerpoint showing how you got into the deal, what you did, the returns you made, etc...show that you might be able to generate these returns for your potential investors.
Then you just need to put it out to your network. You would be amazed the appetite out there to find a reasonably safe investment with someone who they know, that pays them at least 8% (which is the usual preferred rate these days for investors to ask for). There's no one place to go to, nor is there a quick way to do this, but it is very doable. We just started a fund and were looking to raise $2 million. We ended up cutting it off at $4 million and turning down money so we could get started.
The key there was to have a track record that we were able to professionally write up - I had about 9 years experience running smaller properties from 4-24 units - and the investors felt this experience would translate to bigger properties. Second - get a good team - legal, accounting, and property management (even if they're friends who you cut in for a couple of points). If you are getting investors, you'd want to have the agreements and all put together up front so if someone says, "Oh, why don't you send me your information", you can 5 minutes later send him your PDF/Powerpoint of your background/track record, your proposed deal structure (either a basic document on up to a Private Placement Memorandum), and a very detailed pro-forma of your proposed deal, showing the annual projected cash flows out 7-10 years, then showing an estimated sale in the final year. This way, the investors feel like "this guy's on top of it" and you'd be surprised at the positive reactions you'll receive once you start putting it out there.
Some of the bigger investors i know who invest large family funds and the like all are saying "there's a lot more money out there than there are good deals". So good luck - and go find some of it!
Real Estate Consultant · Camarillo, CA · Member since 2010 · 2k+ posts · 1k+ votes
11y
There are a lot of discussions on the proper way to approach potential investors. You need to be sure that you do it properly according to the SEC rules or you can end up in serious trouble. Read the Reg D 506b and 506c rules and get familiar with them.
Rental Property Investor · Los Angeles, CA · Member since 2014 · 120 posts · 88 votes
11y
Jeff's got a good point. Whatever you do, try to find an attorney to run things by to make sure you don't get yourself in trouble. If one of the "friends and family" in your syndicate turn out to be not so friendly, then they could cause trouble if the syndicate isn't organized properly.