Quote from @Robert Ellis:
Quote from @Don Konipol:
Quote from @Robert Ellis:
Has anyone here successfully raised over $1M in equity for a real estate deal using an online platform? If so, which one, and what was your experience? I’m evaluating:
1️⃣ Fundrise – Open to all investors, $1B+ deployed, low fees, good for smaller raises.
2️⃣ CrowdStreet – $3B+ raised, focuses on large commercial deals, accredited investors only.
3️⃣ RealtyMogul – $500M+ raised, REITs & individual deals, open to non-accredited investors.
4️⃣ EquityMultiple – $300M+ raised, high returns, accredited investors only, mix of equity & debt.
5️⃣ Yieldstreet – $1B+ raised, alternative assets beyond real estate, typically $10K+ minimum.
Would love to hear from anyone who has successfully raised capital on these or other platforms!"
My experience is that the major platforms want two things
1- sponsors with a verifiable track record of success in the same property type
2- sponsors capital investment in the project
Sponsors utilizing these platforms have a large "gap" to make up - that being the difference between the amount of capital raised and how much of that capital goes into the actual asset, vs how much goes to fees, costs, etc.
The attraction being that the sponsors believe that the platforms will raise the $, so they're out of that end, well maybe, maybe not so much.....
I've raised over $500 million in syndication and funds. We use our own platform, and operate under Reg D 506 C.
@Robert Ellis, you're obviously very experienced, and have a valuable property and deal going, well thought out and planned. The majority of people I see on BP asking about syndication lack any track record of success, do not have sufficient knowledge of the property type specifically or real estate principles, financing and law in general, and have little or no capital. There thinking goes something like this - I can buy this great property for $5 million cash flowing $600k per year (they neglect expenses). If I do it with a syndication I will have no debt; the investors will get a 6% ROI and I'll keep the rest ($300k per year). Plus, since no. debt I won't have any liability. If necessary I can borrow any funds I do need thru Pace Morby.
Thanks for the comments Don. What is the platform? Are you saying you made your own site and constantly are raising equity? would you mind sharing it I'd love to check it out. Are you raising for more single purpose funds and SPVs or perpetual open ended?
We've looked at doing this for a land development fund, horizontal development fund, subdivision I think is best as SPV for new construction or build to rent, I've been talking to groups but it seems horizontal lot development in the south east United States is getting the most interest from an equity perspective. we want to set that up this year.
is your experience more in syndication for debt or equity and what types of assets and strategy? would love to discuss in depth same goes back to you. Your knowledge shows your experience
In 2002 I founded a fund to invest in hard money loans that I originated. The fund capped out at $5 million holding about 25 notes at any one time. In 2005
I began a second fund with the same criteria, and similar results.
These funds were finite life 3 year funds; the original fund was renewed twice by a vote of the investors (unit holders - limited partners) and the second fund renewed once. By 2013 both funds had been wound down and principal returned to investors. BTW, these were both Texas only fund, exemption from registration was via the intrastate exemption, and compliance was with the Texas Securities Board, where the offering was filed and reviewed to be in compliance.
in 2014 I started a Reg D 506 C note fund, with the emphasis on note sizes much larger than the Texas only funds - $400k - $5 million. In 2016 we started a real estate equity fund, again utilizing the Reg D 506C SEC "safe harbor" for private offering exemption from SEC registration.
Initially in our setup, we used a "off the shelf" platform that wasn't fully suited for what we wanted. When the software provider gave us notice of a fourfold price increase, we began searching for an alternative.
Our "funds" are structured as series LLC. So, we are required to file Form D with the SEC only once - for the "parent" LLC. Each note we purchase is in a separate series, hence only a single asset make up a specific series, and there is no cross liability. investors who have registered with us and provided sufficient proof of accredited status, are presented with the opportunity to invest in a specific series, with the only asset of that series being a single note. We have essentially done the same thing with the equity offerings, thou on a somewhat smaller scale.
Since an accredited investor can choose to invest in one or more of our individual offerings (series), and each offering is a single note or single real property, the offering mirrors a syndication offering rather than a fund offering. We are open to accredited investors across the entire country, and invest in property and notes nationwide.
During our search for a replacement platform, we came across a system developed specifically as an in-house platform for a private lender we knew. Having spent significant money developing the platform, they wanted to monetize their development but knew the platform would need significant improvement to be salable. We made a deal with them where we lease the platform for a modest, almost token payment, but have provided significant input in improving the system. We actually hired our own software engineers to modify the system for what we needed, and allowed the developer access to and property rights to what we developed in exchange for a long term license at low cost. Further, the system has been modified to be very robust for real property as well as notes.
There are three main areas of the platform
1. in house use - "deals" are inputed into the system allowing access to all documents, deal status, remaining work to close, pricing, etc to both my partner, my self, and both of our other 2 employees. Mortgage brokers who register with us can input loan requests directly, add documentation, check status of their loans, etc.
2. information - concerning loans, loan requests, referrers, investors, etc. are all available in a variety of reports. The platform automatically directs our bank to ACH distributions to investors when income is received or an asset is paid off or sold. Loan interest nis calculate and invoices automatically emailed.
3 - Investor use - investors can access their own accounts with information on their past, current, and proposed future investments, distributions, interest, etc. They are also able to access new investment opportunities and all documents related thereof. Further, they can arrange to wire or ACH funds to us for units purchase, sign Operating Agreement and Subscription Agreement, and download or read PPM.
