How to Raise Capital at the Right Cost

You need to be able to raise capital at the right cost of capital too. I'm raising money at a lower cost of capital than most other syndicators even understand. It's the golden goose, I don't think anybody really understands it. It's a good structure. 

When we came out to the boardroom, which is the majority of the money, 90% is invested in stocks and mutual funds and bonds. $4 trillion sits in the 401k market. So when people tell you that they're, you're going to run out of money at that cost of capital, first of all, they don't understand the returns that people are typically getting. I think that that was something that we raised our eyes, you have to find out what your investor wants, that's number one. You don't want to teach your capital. You want to find out what they need, what they want and how you can supply that. Coming from wholesaling and the fix and flip world, I think we knew that we could raise capital at 10 or 12% and people were really happy with that.

We have a lot of happy investors that have been investing with us for years like that. And then when we moved into the multifamily space which is even more secure. It's not an empty house that we're fixing, flipping for six months and we can only deploy their capital at six months at a clip. So it was not really a 10 or 12% return. It's much less than that because we have to redeploy it. And this is a secured asset-based on cashflow, five-year deployment. They get some additional tax benefits. So why wouldn't they be excited about that? Our investors are, your investors are, you wouldn't be able to have however many doors under management you have if your investors weren't happy. 

That's the trick, I'm in the capital game. I think people either love us or hate us but as long as our investors love us that's all that matters. I mean, we're only a subject to one type of scrutiny. Invest through your investor's eyes and, um, what, and, and, and you're realizing that to your investors, not all investors need 20% returns. Fact, there's a lot of investors that will say that's risky. You show them a return like that, they assume that with risk and they're like, "Oh hell no. Not gonna do that deal". 

stability, consistency, passivity, we're all about the return of capital first, return on capital second.