Positioning Yourself Wisely in the Real Estate Game

We all go through learning experiences in everything that we do in life and this business is not different. And I was under the impression that once you find a good deal, when you look at several hundreds before you find one that’s nice and makes sense, I was under the impression the money will follow. That it will be no problem raising capital and having people like, yes take my money. Until I realized that it wasn’t like that. Until I realized that no, you need to let people know beforehand what you're doing, what they can expect, it’s a lot harder. It could be done but it becomes a lot harder to raise the capital you need because you only have a small window of time to get that done, so the most important part is positioning yourself as soon as possible. Even if you don’t have a deal whatsoever, get something, sample deal from another syndicator from sponsor or somebody that you know with that ability and start an appointment and talking to people until May, something like this comes along. It’s just something that you’re interested. And learn the ins and outs of it because people are going to have a ton of questions, you know, investors.

I compare real estate syndication to any other asset class. Real estate, it’s just an asset class. Most people don’t know that you can invest passively into something like that or they heard that they may have the notion that it’s only reserved for the ultra-wealthy and they don’t know that they could invest into a syndication with an operator. You know, with a little bit of savings and you don’t have to have hundreds of thousands of dollars to do that. You could do it with a little bit of savings as long as you have a little bit of knowledge of investment. But a lot of times, they’re going to have questions like, how do I get paid? When do I get paid? What kind of taxes or taxation event is going to represent? That’s just endless amount of questions. So, the more you know about how the asset class performs, the more you’re familiarized with just a little bit. If you’re going to be a syndicator, you have to know a little bit about how a stock will work. Because in essence, what you do is you’re buying a stock in an LLC in a property. You’re like a mini – a real estate investment trust. If you don’t have some basic knowledge of how to explain that and the investors know, they just used, like investing in a start for something that is private instead of being something public. Where you go to Fidelity or where you go to trader or something and you buy stocks into a company, this is something like that but it’s a much smaller scale. It’s an asset class, the business itself is that asset, it’s the building, it's the mobile home park, it’s the strip center or whatever you’re raising money for. 

Listen to the full episode here: https://lifebridgecapital.com/2019/08/ws311-positioning-yourself-wisely-in-the-real-estate-game-with-ivan-madrigal/

We have a platform, whether it’s MailChimp or other, you can handwrite it and have those self-commitments per se from those investors, "Yeah, if a deal like this comes across, I’ll invest." Try to have an idea of more or less in what range would you invest between 25 and 50, between 50 and 75, between 75 and a hundred. The more you know from this investors, the better it is. That goes as far as knowing whether they will be accredited or not accredited and the more you know, the better. If you don’t know that and that’s fine too but at least, have some sort of idea of how much they can commit if the right investment comes across. And the you start creating your database. Like I said, whatever you choose you want to create, I use MailChimp for my mail outs and for my reservations and investors to register. That’s how I have my investors, I have them go into my website and go create a login and register on my website on that platform. I keep tabs through that platform syndication prompt. It could be done through anything because you could do it manually if you want to. I’ve heard of someone that actually had a notepad with names of people written down and things like that. By all means, you can do any way you want. 

I like to have a range so I have an idea of how much money I could raise and a particular time. Like I said, this is what I found out and recently, I’m learning the ropes a little bit more intricate on raising a lot of money. Because you can raise $200,000-$300,000 without a problem. Probably with the people you know around, friends and what not but if you went out and raised a lot more money for a bigger deal, you really need to have a database of people because there’s always going to be those that tell you, "Yes," but then, "I’m tied up," and you’re in there. "I can't come up with that much liquidity that quickly now," or whatever the reason may be and not all deals are the same and not all investors are the same so investors want to keep their money tied up in a deal for four or five years and then some might want to keep it there for longer and the deal you might find might be a deal that doesn’t have an exit strategy for 10 years instead of four or five. With that goes also knowing those investors as well. This guy still want to be tied on the deal for 10 years and this is the 10 year play, I am not even going to bother. Or I end up telling him, "Hey listen, I know you don’t want to be tied down for so long but would that be of interest?". But knowing beforehand, what their objectives are is also important.

Listen to the full episode here: https://lifebridgecapital.com/2019/08/ws311-positioning-yourself-wisely-in-the-real-estate-game-with-ivan-madrigal/