Raising Capital For Multifamily Deals

I have two partners, Carl Suverkrop and Mike Vann, we purchased a deal in a Pryor, Oklahoma, which is a small town just East of Tulsa. And normally we wouldn't look in a market that small because it's about 20,000 people, but Google is putting a large data facility out there and so the town is just going crazy, there's just ton of activity there. Google's building out infrastructure all around that area and everything's 100% occupied there. So we feel really good about where we're at on the rents and then we could slowly raise the rents and it's more of a yield play.

The deal is already making money, so it's going to make money from day one, it's not a huge value add and we're not going to put a ton of money into it. We're below the market rent, so we're just going to raise the rents over time and then we have a plan to sell it about three to five years. Our raise was about one and a half million dollars and we had more money than we needed, so we'll probably have to give some back or take a hundred thousand and cut it in half and give some of these investors back their money. 

I had a little taste of capital raising on my first deal, this would seem to go a little bit smoother. I didn't go out and work people beforehand, like taking people lunch and telling them, "I'm going to find a deal if I do, would you be interested in that?" It was none of that, it was like, we found a deal, we'll put together an email, we shot the email out to everybody we knew and we followed it up with a webinar and we had our money. It was a million and a half, it's not a huge raise. I think our minimum investment was $35,000, but when you start getting checks in for $50,000 and $100,000, I think we had one, $200,000 investment, so that fills up pretty quick. 

The raise was released smooth, one thing I did learn on this is that it is a group effort, you want partners in these deals, it's so much work getting these things off the ground. We had a partner that's working with the brokers, handling the legal, handling the money coming in from the investors, somebody is dealing with the property management company, there's just so many aspects to getting these deals closed. I can't even imagine trying to do one of these on my own, it's a lot of work. I'm sure people do it and maybe after I have more experience I could do it, but it just seems like this is just team teamwork, teamwork makes the dream work because you can all just assign all duties and everybody take a little area of the process on getting this thing closed and it's going to get done correctly. My partners have been great, everybody's carrying their weight and looks to be a very smooth transaction.

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