All Forum Posts by: Annie Dickerson

@Brooke D'Avanzo One of best things you can do if you're low on cash reserves but have time/knowledge is to partner up. Find someone who has cash but doesn't have the expertise or the time to find or underwrite the properties. You bring your expertise and sweat equity to the table, they bring their capital and balance sheet.

Another way to go about it is to find a sponsor team doing commercial syndications and see how you can help. You can bring your underwriting or other skills, help to raise the capital needed to close the deal, or assist in other ways.

This is exactly what has allowed us to scale up so quickly. We started out a little over 2 years ago joining different general partnership teams and helping to raise capital, do due diligence, manage investor relations and paperwork, etc.

Through those partnerships, we've been able to grow our investor base, help hundreds of investors invest alongside us, and close 25 deals in the last 2 years.

Since you're learning a lot, I'd also recommend starting to share what you're learning with friends and family through organic conversations, posting on social media, and starting a blog. That way, you start to position yourself as a leader in the space, and partners and investors will start to flock to you.

Hope that helps. Good luck!

One of the best places to get started with finding passive investors is to talk with friends and family. Share with them what you're doing in real estate, the opportunities you're looking at, and what you hope to achieve.

Through these conversations, you'll get a sense of the types of questions that people might ask about your opportunities and investing with you, so you'll get better at speaking to those things and addressing their questions and objections.

If you have friends and family interested, that is the best, as they already trust you, and trust is the most important thing when finding passive investors for your deals. As you gauge their interest and amount of capital they might want to invest, put together a sample deal package and walk them through it.

This will give you the opportunity to walk them through a hypothetical deal that looks similar to the type of deal you're looking for. The goal is to answer all their questions and address all their objections through the sample deal, so that by the time you share an actual deal with them, they'll be ready to invest.

For friends and family who are not interested in investing with you, ask if they know anyone who might be interested. Often, friends and family can be the best source of referrals.

Overall, it takes time to build up a strong base of passive investors, but it's very much worth it! Learning how to raise capital and leverage private money will allow you to scale your portfolio much more quickly than if you were only using your own capital.

Good luck!

@Joe S. If the goal is that you want to be able to step away and have someone else manage it so you can be more passive, what about investing passively in multifamily syndications? 

That way you can continue doing what you know in SFHs and also diversify into different markets and large-scale multifamily, all while partnering with experienced multifamily operators. 

And, through investing passively, you will also get to learn more about the process of investing in multifamily and see if you want to go down that path yourself. 

If you don't have a track record and are looking for capital from private investors, you might want to consider partnering with a more experienced operator for your first few deals. That way, you can lean on their experience to help you build your own track record and investor base.

This is exactly what I did when I got started in multifamily syndication. I partnered with an experienced team with a strong track record behind them, and I joined the general partnership.

When I talked with my investors, I shared with them the track record of the team as a whole. Then, gradually, as I got more deals under my belt, I had built up my own track record.

The best way to get started in raising capital is to have organic conversations with your friends and family about what you're doing in real estate and the successes you're seeing. And, the key is to do this BEFORE you have a deal under contract.

The reason you want to start with friends and family is that they already trust you, and trust is the most important part of raising capital from private investors. If they're going to invest several thousand or even hundreds of thousands of dollars with you, they'll need to trust you as a person, your capabilities, and your integrity.

The reason you want to start before you have a deal under contract is because raising capital takes time. Many people start by getting a deal under contract first, then thinking that the capital will fall into place because it's such a great deal.

The reality is that investors invest in YOU much more so than they invest in the deal. Anyone can make a deal look great on paper. Investors need time to think about these types of investments and to build that trust with you.

Hope that helps. Good luck!

This is an excellent chicken-and-egg question. How do you get investors/capital without a deal/team, and how do you get a deal/team without investors/capital?

The key is to start with the investors. Start by having organic conversations with people you know. Tell them what you're doing in real estate and the successes you're seeing. Teach them what you know. 

If you don't have a deal, you can share with them a sample deal. Prepare a short document or slide deck showing photos, numbers, and information for a fictional deal. Tell them that you don't have a live deal for them to invest in, but that when you do, it'll look something like this.

The sample deal will help potential investors grasp what an investment with you would entail. As for the team, you can explain that you'll only partner with experienced teams and operators, and that you're actively looking for the best partners.

Through this, investors will start to see you as a leader, and some will express interest in investing alongside you, which will help you get started in raising capital.

I started out with house hacking duplexes, then started investing in small multifamily out of state. Then, because friends and family were interested in investing alongside me, I started to get into syndications and raising capital.

I was intimidated by raising capital at first, but then I realized that raising capital isn't so much about selling as it is about educating your investors. 

The best way to start is to start talking to your friends, family, and colleagues about what you're doing in real estate and the success you're seeing. Through that, they'll naturally become curious and interested and want to learn more.

Through those conversations, you can determine whether they're interested in investing with you on future deals. 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.

@Joe S. I love that you’ve found success through SFHs. That in and of itself is a huge achievement and shouldn’t be discounted just because there are so many out there touting the benefits of multifamily and economies of scale.

I started out with house hacking duplexes, then moved on to investing in small out-of-state multifamily 4-8 units.

Then, because my friends and family wanted to invest alongside me, I started to explore syndications and have been able to co-sponsor dozens of large-scale multifamily deals across the country.

I think scaling up to multifamily comes back to your goals and what you’re trying to achieve. It seems that you’re seeing quite a bit of success with SFHs. Is there a certain pain point that you’re looking to solve through investing in multifamily?

Oh right, I do remember that you're dealing with something similar, @Maxwell Manatt. Glad you've been able to work that out with the seller. Fortunately, our seller is a pretty good guy, so he's very amenable to meeting us halfway. In fact, he said he could have just left those tenants in there, but he didn't want to leave a mess for us, so he decided to evict so we could have a clean start.