Updated: Jan 9
As a syndicator, property deals often present themselves without notice, and to capitalize on those opportunities you have to act quickly. That involves raising capital from investors in order to begin the process of acquiring the property. However, acting quickly on the property and having investors act quickly on the financing side are two different things.
While it will take time to analyze the opportunity, prepare a Private Placement Memorandum (PPM) for investors and do all of the things necessary to make the deal happen, you will still need to raise capital fast. Simply stated, without the capital, there is no deal.
There are some things you can do to raise capital quickly and even enjoy doing it. I realize that’s a pretty bold statement, because calling investors for a fast commitment on capital is not something that’s easy to do. Quite honestly, I can’t think of anyone I know that would find it easy to do either without setting up the right structure first. But if you are proactive enough on preparing for the time when you have to make those calls, the entire effort will be a lot easier.
There are many ways you can raise capital. Some are traditional methods, like bank financing, borrowing from friends and family or team up with another company that will raise the capital via a joint venture; some methods, like Crowdfunding, present new avenues to raise capital.. However, those approaches in most cases don’t provide the ability to raise capital quickly. Over the years, I have found unique ways to not only raise capital in a short period of time, but to enjoy the process as well. In this article, I will share my secrets with you. Secrets it took me a while to discover…
Secret #1: Provide Something of Value without Asking for Anything in Return
Generally speaking, syndicators provide some type of value to their investors, whether it’s knowledge, experience, access to deals and better financing, etc. But the value is provided once there is a deal on the table. The key here is to provide value to passive investors without asking for anything in return, way before you have a deal to offer them. Many syndicators don’t focus on providing free value to potential investors, and this is where you can be different.
If you think about it, giving value to investors without presenting a deal to them or ask them anything in return is an excellent relationship-building tactic that will produce results beyond your wildest expectations. The way I provide value to my current and potential investors is by establishing a thought leadership platform. When I started building my thought leadership platform, my goal was to be the go-to person whenever anyone has a question about any aspect of real estate syndication. I wanted to be the “trusted advisor” for passive investors and others who work in the syndication wheelhouse.
A thought leadership platform is basically a strategy where you provide free education using social media: writing a blog, running a podcast, talking at events and educating investors about multifamily investing, etc. Use the platform to share the knowledge that you disseminate over the years, without asking for anything in return. That truly means asking nothing whatsoever in return for sharing your knowledge, experience and expertise.
I constantly blog, produce podcasts, often hosting industry leaders as guest on my podcast, hold meetups and attend other meetups and podcasts as a guest. I share my knowledge in all those platforms. I also stay active on BiggerPockets and answer investors’ questions regarding passive and active investing. These are all tools in my toolbox that I use to connect with investors.
While you don’t expect nor ask for anything in return for sharing your knowledge, your platform can generating leads from passive investors, who will want to talk with you about investing in your deals.
When you provide