So Id like to hear from some people that have syndicated or have raised capital to fund deals that they've either found or created. I understand that having a piece of real estate, where the numbers work, is key to having a good deal and not to short sight other components such as property management, contractors, etc... But I'd like some insight on how valuable having or creating a network of high income producing investors can be. Is being the individual with this network of investors a valuable component to a team? Long story short, is there value in not having a deal but having investors? Or do those of you having the deals find there is no need for what may be considered a middle man? Thanks!

@Joseph R Fornwalt I think the primary focus for an investor is finding a good quality deal. You will always be able to find investors if the deals make sense. Now with that being said you do need to build those relationships with private money investors so when the deal arises you are ready to strike. Its the old saying what comes first the chicken or the egg. If I were to put a value on the most important it would be finding the deal. I am a proponent in doing the deal yourself unless that investor brings a lot to the table like expertise, resources or contacts.

Originally posted by @Joseph R Fornwalt :

So Id like to hear from some people that have syndicated or have raised capital to fund deals that they've either found or created. I understand that having a piece of real estate, where the numbers work, is key to having a good deal and not to short sight other components such as property management, contractors, etc... But I'd like some insight on how valuable having or creating a network of high income producing investors can be. Is being the individual with this network of investors a valuable component to a team? Long story short, is there value in not having a deal but having investors? Or do those of you having the deals find there is no need for what may be considered a middle man? Thanks!

 You will only successfully fund your deal if you have investors lined up first. You cannot draw water unless you have first dug the well. If you wait until you are thirsty to start digging, then you will die of thirst before you reach water. 

The old adage about money coming if you have a good deal only works if you have investors to pitch your deal to. 

If you have no investors in your own network, then teaming up with someone who does is a good idea. 

And if you want to scale a business, then dividing up the jobs into deal sourcing and fundraising with some other people is essential. Very few people can do both halves of this business well. 

There are many individuals who run private equity funding firms.  They partner with active operating sponsors who need to supplement their own capital raising efforts based on their deal flow pipeline.

And when the market eventually turns and funding dries up, who is uniquely positioned to take advantage of it?  That's right...those with access to private funding.

Yes. That has value to a large degree.

Some operators need that spot on their team filled.

Some don't. :)

@Alex Deacon @Jonathan Twombly @Mike Dymski @Ivan Barratt Thank you all for the replies. Im still very much in a self education phase, not that I feel that will ever end, but still a little ways out from being ready to make my first real estate purchase. However, I have started to think about how I would like to grow after getting my first deal or two done. Im currently a full time registered nurse and have a few years worth of professional relationships established with multiple physicians and have begun to look at this as a potential opportunity. Something I would probably need to seek out legal advice on, but its something Im starting to wonder that if utilized properly could be a "something of value" that I can bring to the table. Now the ins and outs of making that happen, well I still have to get some experience and dont want to get too far ahead of myself. Thanks for the perspectives.

@Joseph R Fornwalt focus on building relationships above all else. Raising money for real estate is less about the deal and more about you. The more you can convey (and hopefully exhibit) honesty and positive ethics, the more you're going to attract people.

Once you have that, start by attending tons of meetups. Go where people with money would go and go to start friendships, not to solicit money. Some get away with high-pressure sales, but that's not my approach because it doesn't fit my personality. I am in it for the long-haul so if it takes me a couple years before that one particular person decides to invest, that's fine with me. 

@Joseph R Fornwalt

No matter which route you decide to take, you still have to understand the ins and outs of the business, how syndications function, the offering details, and the overall process. So while you're building the relationships with the potential investors double up on educating yourself. Start with Gene Trowbridge's book "it's a whole new business". He's a practicing securities attorney. Then gradually add more, listen to podcasts, and network!

Best of luck!

@Joseph R Fornwalt

There are many people out there that specialize in the capital raising area of real estate investing. Capital raisers will also network and build relationships with others that may not have the network, but are able to analyze and bring in deals. Others do the whole lot themselves as well. 

Reach out to @Omar Khan and @David Thompson . They will be able to give you a good idea as to how they go about raising capital. 

thanks @josh

Hi Joseph,

It's definitely a team game and someone who thinks they can go big doing it all themselves is short sighted or has no life or both.  Capital is king and will always be.  Here's some of the essentials I've synthesized to about 5 key points learned in working on about 25 syndication deals and raising close to $100m (see blog post link below) 

I'll give you a few other ideas right here, if you feel you are selling something you are doing it flat out wrong.  Or, if you hated sales like I did after flunking miserably at that pursuit when I got out of college many years ago, carry on.  You are in the education and opportunity sharing game.  Controlled passion, being educated, working with great partners, sharing with others and providing them a great customer experience end to end is what its about.

Second, its the long game.  Now I did this in 3 years so how long is that.  If you love it, it's peanuts and you are not working anyway so your stamina and energy is off the charts.  To some who are in a hurry as in" I need capital for the next deal or one I have now " , these tips aren't much help.  

My top 2 specific tips would be:  Work alongside and join experts - think why would a lender or investor want to give me capital with little or no experience - you make it way harder on yourself like swimming upstream.  Later when you gain that experience, you can be your own lead.  Secondly, develop a thought leadership strategy that you are consistent with and see your network grow providing great content overtime.

https://www.biggerpockets.com/member-blogs/9145/67627-raising-capital-top-5-essentials

Hi Joseph,

As to your question ("I'd like some insight on how valuable having or creating a network of high income producing investors can be. Is being the individual with this network of investors a valuable component to a team? Long story short, is there value in not having a deal but having investors?").

This is my Layman's (not an attorney) understanding of how this works.

I do not believe you can be paid for putting an investor with a Syndication unless you are a certain type of licensed security broker, although you MIGHT be able to receive a percentage participation in the deal on the sponsor side--BUT that would be up to the Syndication's securities attorney regarding it's legality.

That is my understanding of how this works, and I am not an attorney, but before doing anything like this you should seek legal counsel--because the penalty for violating securities laws sometimes includes jail time.

There are both state and federal securities laws that could come into play in a situation like this, and with a syndication you really need to be squeaky clean.

So yes, there MIGHT BE value in it, but that is up the Syndication's attorney to make that decision.

Good Luck!

@Joseph R Fornwalt

It is possible to become a GP in a deal for raising money but I don't believe you can collect a referral fee (as others have said, ask an attorney, I'm not one and I'm also just some stranger on the internet). However, you'd really need to understand the deal and sponsor to be able to raise money. Ideally, it would be a deal that you are also putting your own funds into. As others have said, network to find sponsors and see if this is something you would want to get into with your network. 

@Joseph R Fornwalt

There are investors who run the deal & analysis side who would be willing to cut you in if you can bring them access to a substantial outside network of investors. So yes, this is definitely a good strategy, and one I have employed.

Just to be clear. This is still very active. You want to bring them people who are ready and knowledgable. Getting investors to close is the hardest part. You have to do this legally and with care. A spreadsheet of email addresses is not going to cut it.