Raising Capital - The Fun Begins

I am sure you've been there. You want to start investing in real estate; you have done your homework, heck maybe you've even purchased one of those late night "Get Rich Quick" schemes. Now you're all pumped and ready to go but you have one problem: "Where will the money come from?" Sure, you can do creative financing and get no money down deals, but they are hard to come by and may not fit your investment criteria and goals. So what do you do? If you're like most people, you work 8-5 Monday-Friday; have steady income, 401k, a stock portfolio, equity in your house, and maybe an IRA. Sure, you could tap your own resources but how far will that get you? Unless you have a net worth of $1 million or more, not very far. You could start out by buying single family homes or fourplexes. There are a ton of investors who start out this way and build an empire. In fact, starting out this way is usually the best way. Your risk however, increases with each deal and, as in any business, some will go sour. There is another way, one that involves OPM (Other People's Money). OPM is a driving factor of our economy and will continue to be as long as people continue to start their own business. But many times, we are faced with the biggest factor that prevents us from success - Fear of Failure and Rejection. I admit that this has held me back in the past. It can happen to any of us. Ask any successful entrepreneur and they will all tell you that you must overcome the fear. This leads me back to the original point of the article. Throughout the process, you will cross paths with many people. Every person you meet can be a potential investor. Even if they don't have money, maybe their Uncle Bill does or one of their co-workers. Never discriminate. 99% of the successful people you meet probably started in the same position as you and I - from nothing. Raising capital is a game of numbers but you can help save time by targeting your search to people and companies that meet your criteria. Regardless, you are going to have people tell you no, laugh at you, ignore you, tell you it can't be done, and maybe even kick you out of their office! This can really take a toll on an individual’s confidence. By telling yourself you can do it, and will do it, and knowing that you will get rejected along the way will help you overcome your fear and deal with it when it happens. I have had to do this myself and it's not fun. Especially when it's your first deal, you’re in your 20s, still in college, and pitching to a bunch of millionaire executives all over the age of 50! I had to overcome my fear of my inexperience and age. In the end, I was able to establish investments in a multi-family acquisition of $5.1 Million. The deal eventually fell through (not because of lack of capital). I still look back at that deal and realize that because of that deal, my hope and drive stays alive. You should have a general knowledge of state and federal securities laws to make sure you don't violate them and put yourself or others in liability. Depending on how you structure your deal, you may be selling securities. There are ways around this but I'm not an attorney. Please consult with an attorney before you begin your venture. Most attorneys will at least give you a free consultation to get you going in the right direction. Along the way, I have had rejection and failure. In fact, sometimes I still have to keep myself psyched up to get over the fear of failing and rejection. But I keep going and going. All it takes is a little success to get you going. If you keep getting rejected for capital, don't give up. First take a look at yourself and your business, then your approach, then your targets. Eventually you will get it.