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 value to investors before you share an investment opportunity with investors. By doing this without asking for anything, I’m building the credibility I need to establish before they would consider investing with me. In addition, it makes me feel good for helping.
There are other tactics in this arena you can use, like posting on social media, building a following on Twitter and Facebook, writing articles for magazines and real estate publications (I write articles that are published in Forbes), and develop white papers among other approaches. The bigger your presence, and the more free value you provide, the more investors reach out to you.
Secret # 2: Always say, “YES”
I can’t tell you how many times I’m called, texted or emailed by people who I don’t know. They have seen my name on the internet, saw me speak at an event, heard my podcasts, or read my blogs. Often, they want to chat or even meet me face-to-face, either to learn how I do what I do or to talk about passively investing with me. My answer is always a resounding YES. In fact, truth be told the word “no” doesn’t exist in my vocabulary when it comes to investors.
Here’s something most people don’t realize: when you help someone else, you often get new ideas for your business. I know I do. Sure, I enjoy meeting new people and discussing all things real estate, but the real plus is that the dialogue with others helps me find new ways of looking at things, or new ways of approaching old problems. Sometimes I get answers to questions that I’ve had or they help me resolve a challenge that I’ve been dealing with.
Other times, people I meet with offer suggestions that provide value to my business. Not surprisingly, these meetings have produced some terrific partnerships that have lasted for a long period of time. Remember, nothing was on the table when I agreed to meet; yet the meeting ended in interesting business collaborations, and many times, new friendships.
In addition, I’ve met with individuals who ultimately expressed an interest in passive investing, even though that was never discussed when we agreed to meet. That’s the beauty of always saying, “YES” when someone calls to arrange a meeting. You just never know what will happen. I believe in ABR = always be raising, and meeting people that I don’t consider as investors at first (but then turned out to be investors) helped me raise capital much faster.
Secret #3: Automate the Process
We’re all confronted with time constraints. After all, there is simply only so much time in each day, and that time has to be allocated to a variety of areas, which includes work, personal time, recreational time, and of course sleep. Each 24-hours goes rather quickly.
When I raised capital for my very first deal, I sat down and had conversations with each investor. I went over the deal in great detail with each and every one of them, spending time highlighting the pros and cons and taking the necessary time to answer all of their questions. Quite honestly, it was tiring, repetitive, and very time consuming.
Then I got smart. On my second deal, I arranged a conference call, where I discussed everything I would normally talk about in person. This included the market, the business plan I was proposing, all of the reasons that I loved that particular deal, as well as answered all of the investors’ questions. I also recorded the call, and I sent the recording to my investors.
Many investors committed right away. Some had some specific questions, which I was happy to answer, but the process was pretty fast. The big plus was that since I recorded the conference call, I didn’t have to go through the entire pitch all over again. You can only imagine how much time I saved by doing this!
I ended up finding a way to automate a lengthy and tiring process in a way that appealed to my target audience. More importantly, I was able to quickly get commitments from my investors on the capital I needed. The key is “quickly,” because as I explained at the onset, some opportunities come along and require immediate action. The entire process of raising capital quickly became more enjoyable and less taxing.
Being proactive is the key to raising capital quickly when the need arises. I’ve shared some of the ways you can do this, and hopefully you’ll find that you enjoy doing it as much as I do. First, build your thought leadership platform by putting your name and presence out there for people to see. You can do this by providing something of value, something that people can use, without asking for anything in return. Once you become recognized, you will find the job of raising capital much easier. Another proactive approach is to always say, “YES!” when asked to meet with someone who has expressed an interest in real estate and investing. Many times I was able to meet many passive investors other syndicators wouldn’t talk to because they were not initially interested in investing passively. You simply never know what will come of the meeting. Finally, find a way to automate your process, because otherwise it will become too time-consuming and tedious. It can be as simple as recording your presentation or creating a presentation that you can use multiple times. The easier you make it on yourself, the more enjoyable it will be.
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About the Author
Ellie is the founder of Blue Lake Capital, a real estate company specializes is multifamily investing throughout the United States. At Blue Lake Capital, Ellie helps investors grow their wealth and achieve double-digit returns by investing alongside her in exclusive multifamily deals they usually don't have access to.
Ellie is the host of Unbelievable Real Estate Stories, a podcast that shares true stories from within the industry, and the critical lessons learned, from the most successful real estate investors, innovators, developers, and more from around the globe!
She started her career as a commercial real estate lawyer, leading real estate transactions for one of Israel’s leading development companies. Later, as a property manager for Israel’s largest energy company, she oversaw properties worth over $100MM. Additionally, Ellie is an experienced entrepreneur who helped build and scale companies by improving their business operations.
Ellie holds a Masters in Law from Bar-Ilan University in Israel and an MBA from MIT Sloan School of Management.