Sometimes when I write I feel like being creative and take the long way to my point.
Other times, I really don’t know what to write, in which case I usually see what my friend Brandon Turner wrote about and just argue the other side (cause he is usually wrong, of course!)
Today’s article is going to pour out of me as if laxative is involved. I know exactly what I want to say, and it’s going to come out quickly before I forget. I’d like to think that this is going to be powerful and actionable…
How to Analyze a Real Estate Deal
Deal analysis is one of the best ways to learn real estate investing and it comes down to fundamental comfort in estimating expenses, rents, and cash flow. This guide will give you the knowledge you need to begin analyzing properties with confidence.
We are Talking About Raising Money for Our Deals – How do We do It?
Well – it’s hard indeed, especially in the beginning.
I will not blow sunshine up your armpit and tell you that you can dive into raising hundreds of thousands and millions of dollars just like that – on your first attempt. No, I don’t believe that you can.
I will say this however:
What it takes to raise $10,000 is very similar to what it takes to raise $1,000,000 – it just takes more of it!
So, What does It Take…?
One thing is for damn sure – you don’t raise by posting “I Want Your Money” on the BiggerPockets forums and the Marketplace. Trust me – you won’t get very far that way!
The first time I raised money it was for a $30,000 deal – an SFR. This was about 8 years ago. The second time I raised money it was for a $45,000 deal – it was for another SFR six months after the first one.
Then there was the $90,000 deal, $120,000 deal, $180,000 deal, and so on…
Lately, as many of you know, I am out there in the world large multi-family looking for deals to syndicate – it’s what I am about now days. At the moment, I am completing a feasibility study for a syndicate on a 180-unit apartment community, and within 2 days last week I received verbal commitments from folks wishing to participate in the amount of $1,200,000…
Now, will every one of those people actually come to play when the starter gun goes off? No, probably not. That just wouldn’t be reality. But, I bet about $850,000 will!
While this isn’t enough to do the deal and I need to keep working, I am not oblivious to the gravitas of a bunch of people who have serious money and could choose to deploy it in any way they want, choosing instead to raise their hand in the air and say: Ben Leybovich – count us in…
How did I do it?
I picked up the phone…
Let me say that again – I picked up the phone!
Does this tell you anything?
Here are a Few Thoughts that You may find Useful:
First of all, you need to understand three very powerful words – ready?
Circle of Influence
That’s it! The people in your inner circle are the people who will jump-start funding of your deals. Think about this – if you can’t convince those who know you best to put money in your deals, how the hell are you supposed convince the world at large?
Everyone of the people I’ve ever raised money with, including every one of the commitments for this 180-unit, has had a relationship of some kind with me that pre-dated this deal. This is important to understand guys – money is about people!
Doesn’t the Opportunity Need to be Good Enough?
Absolutely – the deal must be attractive for people. But, the deal is not the ultimate driver of investor’s decision. You are!!!
Without beating this horse to death, you need to understand that YOU are the big opportunity that people invest in. The RIO, the IRR, and the CCR are a given – people expect those. But they can get those anywhere, so why should anyone go with YOU?
Which Begs the Question:
Do you deserve it?
This, by the way, is not a question for investors to answer – this is a question you must answer. Quite literally – are you worth it? Why should anyone with money and options choose to deploy funds under your management?
What’s so special about YOU? Are YOU so knowledgeable? Do YOU have track record of success? Are YOU honest to the bone or a sleaze-bucket like so many others out there who’ll promise anything to get the money?
Do this Every Day:
Every morning when you roll out of bed, after you pee, wash your hands, brush your teeth, and splash water on your face, look in the mirror and ask yourself the following:
If I had money, why would I want to invest it with me?
Simple – wouldn’t you say? One question to unlock the psychology of raising money…
I am going to tell you some truth now. Please don’t hate the messenger, but you need to know this if raising money for your real estate deals is on the menu:
If you and your friends are spending days on the couch in your parent’s basement, in front of a TV, with one hand on a game joystick and the other hand holding onto a bag of potato chips, I am sorry to tell you there will not be investment capital in your future…get it?
We have circled back to the original thought: who is in your circle of influence? Who are the people in your life and in your space whose attention you’ve got and whom you listen to? Who is on your speed dial?
“If you hang out with chickens, you’re going to cluck and if you hang out with eagles, you’re going to fly.” ~ Dr. Steve Maraboli
The choice is yours!
Be sure to leave your comments below!