"How Do I Raise Capital?" is a question I get asked online.
People often ask me online, 'How do I raise capital for real estate?' hoping for a specific activity to undertake.
However, the reality is that raising capital is not just an activity but rather a strategy. There are various activities that you can undertake as part of that strategy.
This is not an exhaustive list, and there may be other activities that I have missed. Nevertheless, here are some of the activities that you can consider:
Talk to every rich person you know (Moses did a great tweet on talking to wealthy people that inspired this post)
Talk to everyone else you know: 'Hey, this probably isn't for you, but do you know anyone we might be able to talk to who would be interested in building and keeping apartments with us in Los Angeles?'
Direct Response Marketing via Mail: telling people what you do (not soliciting for a specific deal, but just informing them about your work and inviting them to get to know you).
Direct Mail: Postcards (8.5 x 11, folded into half - 4 sides)
Direct Mail: Letters (Wedding Invitation Envelopes, hand addressed)
Direct Mail: Brochures with Letters (Wedding Invitation Envelopes, hand addressed)
Direct Mail: Sending unsolicited Brand Books (our is here)
(Silver Tinfoil Bubble Wrap Envelope)
INTERNET MARKETING
Facebook/IG ads
Twitter Ads
Twitter presence
Podcasts (hosting/being a guest on)
NETWORKING
Professional Events
Family Office Events
Private Equity Events
Real Estate Networking Events
Business Managers
CPAs
Referrals from existing LPs
COLD CALLING
Cold calling and cold emailing people in the business, hard money lenders, or other successful individuals with a proposition such as, 'Hey, if I find a great deal that fits your investment criteria, would you consider doing a joint venture with us?'
We keep track of potential investors we meet in a CRM (Podio is what we use) with notes on the date you met, what you discussed, and the conversations you've had to help you remember.
Take detailed notes when you speak to any potential capital source; what are they looking for?
When you speak to thousands of people, you'll need to keep track of the dates and times you spoke with them.
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These are activities we've personally done that have worked for us to raise us capital:
Networking
Direct Mail to Expensive Homes $2m+
Instagram/Facebook Ads
Direct Mail to private lenders (look up private mortgages/private deeds of trust)
Direct Mail to expensive homes
Create case studies of success; your case studies should have no sign of amateurism. Pay someone to make them look good (we use https://orionconcepts.com/ for our marketing and branding)
Create a brand book for your company; you can see ours at:
www.SchonTepler.com/book <~~click here to view it
If you find someone with capital, but they can't get comfortable with you, instead of asking for money, you can offer for them to buy the deal in their LLC while letting them keep control, and you do all the work.
Document your agreement in writing. It doesn't have to be fancy for small deals, and you can use ChatGPT to create a basic joint venture agreement.
I would recommend using a top-notch lawyer for any seven-figure deals.
After you've completed successful deals, send case studies of the completed projects to people you've met in the past.
Let them know that you'd love to have them invest in your next project, and if it's not for them, ask them to refer you to someone else.
Remember the Aladdin factor: ask people for what you're looking for, and ask many people.
These are the marketing pieces we’ve used to raise capital, we still have too many deals and not enough capital.
Tri-Fold Brochure
Letter
Posts Cards (8.5 x 11 folded in half, 4 sided)
Facebook Ads
I hope this helps on your hunt for capital. We're always looking for capital, so if you know anyone that wants to invest in new construction apartments, shoot me a message😉
Side note:
*The people I've seen scale the fastest are ones that partnered with existing aggregators or syndicators so that they did not have to spend half their time educating people about real estate; they just had to go and find good deals and execute.
*Have great reporting and investor communication with existing investors, and be super responsive and transparent.
-Artem