Raising Capital

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I've thought about getting involved in some serious real estate deals, but doing so takes serious money.

How would I go about raising large amounts of capital, like $2 million or so? I know I need to talk to everone I know, but what is the best way to bring in some real big fish?

Before you go looking for serious financing you need a well written business plan. Show the ROI and cash flows for each year. Be cautiously optimistic with your estimates. If you don't have this first then you might end up meeting that big fish, but you don't know how to sell your dream to him!

So once you have the plan together.... you're looking for what is called an "Angel Investor". They usually have groups in local areas and it takes some real searching to find one. It's not a slam dunk, but it's the single best way to get serious financing for a solid deal.

Another resource you might try is your local Small Business Development Center (SBDC). These are retired veterans of industry that very well could be Angel Investors themselves. Even if they're not they might know someone.

In the end it's all about networking. You are just 6 degrees of seperation from a big fish. Talk to everyone you know! Make a sign and bring it with you when you sit down in a coffee shop! You never know where opportunity will stirke and you just need to keep looking. Good luck!

Raising capital is one of the most important skills you can learn to grow your real estate portfolio. However, most newer syndicators wait until they have a deal under contract before they start reaching out to people to try to raise capital, and at that point, often it's too late.

What you want to do is start connecting with people BEFORE you have a deal under contract. Reach out to friends and family, let them know the type of deal/asset/market you're looking at, create a website and online presence, and add value to others through thought leadership.

This allows potential investors to build trust with you, which is key to raising capital. As you talk with investors and answer their questions (this is all BEFORE you have the deal under contract, remember), you can also share a sample deal with them. This allows you to talk about example returns and sample deal criteria without the pressures of "selling" them on a live deal.

Then, once you've built a shortlist of investors who are (a) interested and (b) have capital to invest, you'll have a better idea of the amount of capital you can bring to the table. 

With that, THEN go out and find the deals. This is a much surer path to success, and now (during the COVID-19 pandemic) is a great time to grow your investor base, educate your investors, and rise up as a leader. That way, when the great deals hit the market, you'll have plenty of capital at your disposal.