Raising capital for Apartment Syndications

[Jeff Banky]

Hello everyone!

As an aspiring multifamily investor, i would like to hear from others about what has worked for them as far as raising capital for deals...

Apart from hitting up family friends and co-workers...I was wondering if anyone out there has any out of the box ideas for finding investors and raising capital....Is there someone out there that has had some success with a method that is not maybe the standard approach? Are there some standard approached that work the best? your thoughts and insights would be very much appreciated...thanks in advance!    Jeff

[Steven Huynh]

Originally posted by @Robert Belz:

@Steven Huynh,

Thanks for breathing some life back into this post! I find myself asking the same questions that Jeff asked 4 years ago. The other posts here gave some great pointers, and I'm curious to learn more about how you help new syndicators/apartment investors market their brand. Additionally, how do you think things have changed over the past 4 years? 

Well, here's the big one:

There are a LOT more sponsors than there were 4 years previously, and more and more sponsors/ passive investors, coming to the scene as I speak. There is too much supply (too many investment opportunities offered in the marketplace), and too little demand (too little investors investing in these deals). There are certainly ways to circumvent these obstacles. One way is by creating 'more demand' or creating 'new supply'.

Here's the unfortunate truth. Most, if not all, of the (new and experienced) passive investors are (and will be) investing with the top dogs: Origin Investments, Cardone Capital, Ashcroft Capital, etc. And it makes sense: they have the best track record (maybe excluding Cardone capital due to their lawsuits), they're the most well-known (therefore most trustworthy), and multiple other reasons. For most people, it's not worth the hassle to dig and find 100's sponsors to invest with; it's just easier to invest with the big guys (for all the reasons listed above).

Note, even the top sponsors have trouble raising capital, such as Ashcroft, they have broker-dealers (was talking to one of them a while back) who try to source capital for them. If they could easily raise capital, then they wouldn't need to pay these broker-dealers. Also, note that Ashcroft, typically speaking, closes $30M+ properties, so these raises they're doing might be the stretch for them. Not 100% confident on that last claim, but hope @Evan Polaski and @Travis Watts can fact-check me.
Anyways, you obviously can't compete against these titans in a head-on game. Your company has to play asymmetrically, double down on your companies strong suits. We've seen numerous times where David vs. Goliath, where David wins. It's not often, and it's not easy, but it happens.
I'll list why (I believe) some investors would decide to invest in the small guys instead of these titans:
The sponsor:
1. Has unique investment opportunities which no other sponsor offers. Could be a unique location, asset class, investment strategy, etc. (Basically every sponsor these days are trying to invest in 100+ unit, Southeastern us/sunbelt region, class B/C, value-add. It's the most unoriginal strategy! Not saying that you won't succeed with this strategy, but you may need a unique twist to differentiate your company.)
2. Accepts non-Accredited investors,
3. Has a personal relationship with the company or principals (digital marketing can actually help with this).
Also, regarding how Vandabur assists multifamily syndicators with marketing, feel free to connect and dm me, as BP forums are a solicit-free zone.

Hopefully, my explanation made sense.

Steven