Who has read Raising Private Capital? Looking for tips!

Question

Hey everyone,

I'm looking for some feedback on what strategies have worked best for you from Matt Faircloth's book Raising Private Capital.

* A quick background on me for some perspective:

I've used my own money and private money to close deals in Huntsville and Birmingham, Alabama with loans as low as $30,000 and as high as 2.5mm in private money. I am looking for feedback because while I have a couple good private lenders, they have particular focuses and aren't always liquid, therefore I'm looking to expand my data base. This is not a situation where I've never done a deal but want to use other people's money. I have a track record currently, and want to put more of my own money into marketing and multifamily deals vs single family, but want to scale my single family business.

I have built a decent list of my "circles" as the book says to do already, and with a little more effort think I can expand that list. One thing I don't understand is how to approach the people on the list though. A lot of the people I know probably know nothing about real estate investing.

With all that said, I am curious what techniques from the book are working well for you? What tips do you have for setting appointments, executing at appointments and educating people who might not be familiar with real estate investing?

I'd also love to hear any other tips and suggestions that might not be in the book.

Thanks everyone!

Matthew Whitaker · Answer

Hey @Caleb Bryant,

While I have not read the book, I have raised capital recently.

By biggest advice (which would have saved me a ton of time spinning my wheels) is to know what the "ask" is prior to walking in the room to make the pitch.  Investors don't want to have to put too much thought into your business and if they do, they will choose to invest in other people who appear more "buttoned up".

My first 6 months I spent bascially putting the ball in the investors court and saying, "How much would you be willing to devote to this and what would the interest rate/return need to be?"

Now I go in and have had a lot more luck telling them this information.

You may have already discovered this, so if you have, I'm sorry for repeating it.

Happy to answer any questions if you want to shoot me a message directly.

The good news is a lot of money is out there looking for returns.  They just need the operators like you who can make it happen.

mw

Jay Hinrichs · Answer

when I first started out in sales the owner of the company  pulls out his amex  this is late 70s and said this is the most important thing you will need and you need to be buying lunch a few times a week..

funny story when I used to accept from BP members  Hey can I buy you lunch to pic your brain.. I ended up paying every time.. you get those puppy dog eyes and when I grab the check they never insist.. the only one that I made pay was a lawyer who wanted my take on redemption rights in Oregon..  but I don't do coffee or lunch anymore.. I do pick my brain for Charity  if they want to donate to our charity aheroshome.org then I give them my personal time .. And help them through the deals..

Matthew Whitaker · Answer

It always helps to have a deal in mind.  Even if it is a small one.

I know two things that you can leverage about these folks. . .

• If you can get them to invest in anything, it is much easier to get them to invest again the 2nd time (and subsequent times after that).  There is some sort of bias I've read a million books on that this is.
• They all talk - rich people talk.  If they have a good experience with you and make money, the best thing you can be is the subject at the next cocktail party.

It is also a numbers game.  Getting them from "Yes!" to actually writing the check is also a challenge.  So you can't stop selling at a verbal.

Caleb Bryant · Answer

@Jay Hinrichs I checked out your non-profit, awesome stuff!

Jay Hinrichs · Answer

for me its track record.. that's what I lead with..  what have you done.. its also a very strong letter from my personal banker introducing me.. I use this first thing when I am talking to a new bank.. they love it.. and so do investors.

second is I don't pursue  small money.. IE 50k 100k.. to much work and I find those folks to be the most nervous to deal with.

As well as I wont do business with anyone that wont fly to Oregon and walk through my new home communities to see we are real.. and meet with my banker and CPA and Lawyer .. its a well defined presentation and then sit back I don't do any selling.. in this area.. its not like selling real estate were you defiantly have to ask for the order and know how to ask for it..

I also have my credentials package  once we have a talk  If they want it I send it to them.

criminal back ground

copy of my NMLS mortgage bankers license and explain you cant get one of those without an FBI background check

copy of my real estate brokers licenses.

My aforementioned intro letter from m banker which explains our 25 year relationship and average liquidity and the deals I helped the bank build out of.  ( this is super strong)

And redacted credit report..  being a HML over the years you would be shocked at those In the real estate game that have terrible backgrounds and you would be shocked how many investors never ask for this stuff.. but if your willing to lead with it.. makes things much easier to get the deals done..  I spend one day on this and I get the commitment at the end of the day I have only had 2 people in 6 years come to Oregon for this exercise that decided not to move forward.. Plus they pay their own way. Never pay other than lunch other wise you will get freddy freeloaders that are all hat no cattle.

Alina Trigub · Answer

@Caleb Bryant

I'm not going to be too unique when I say that real estate is a people business. And since I know you, I can tell you're really good with people.  Now the next step is to understand what are the pain points of your prospects and help them resolve it.  Learning other people pain points and getting to know them better takes a while but it's ok. It's better to have them invest large sums with you down the road then do a one time gig and never come back. So what works for me is to continuously building on those relationships and taking them beyond just solving their investment problem.

If you want to track your biggest money source, there're BI tools that can help you do that.

Jay Hinrichs · Answer

yes and thank you for your donation.. I wanted the real estate community and industry that has been so good to me over the years ..

I wanted to get a vehicle were we can make a direct impact on a hero's life.. without all the overhead most charities need to survive this is just a group of Real estate lifers giving back we are all donating our time and we put in the first 10k..

Caleb Bryant · Answer

Thanks for the tips @Alina Trigub, you are always very helpful!

@Jay Hinrichs These are smaller deals so I guess I could go after heavy hitters that want more volume? I try to connect with bigger investors for multifamily stuff but hadn't used that strategy for SFR's yet. The way you show credibility is awesome, thanks  for that tip. Lastly, I always buy their lunch if they travel to see me and don't insist on paying, but I never tell them that ahead of time haha

Caleb Bryant · Answer

@Matthew Whitaker I like that. I've done both ways (asking what they want, telling them what they can expect), but because until recently tracking was a weakness of mine, I honestly didn't know what was working and what wasn't. I'll try this technique of intentionality. I'm guessing you go into an appointment with a specific deal in mind or do you just go in with a certain number with everyone without a deal necessarily in place?

Who has read Raising Private Capital? Looking for tips!

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