My Four-Step Apartment Syndication Money-Raising Process
I was recently awarded another apartment deal. Here is a link to an article I wrote about the main lesson I learned: http://joefairless.com/find-deals-hot-market/
However, prior to putting the property under contract, I already started the money-raising process.
In this post, I wanted to walk you through how I approach raising money for my deals, which begins before I am awarded the deal.
Step #1 – Am I capable of raising X amount of dollars?
First and foremost, I make sure that I have the equity lined up before I get awarded to deal. That doesn’t necessarily mean that I know exactly who will be investing what amount. I just want to know that I have the capability of raising the amount of money required.
For example, for the deal I was recently awarded, I will have to raise between $7 million and $8 million. Based on experience, I am confident that I will be able to his that number. However, if the number were $25 million or $50 million, it would be a different story.
Step #2 – Who will be the investors?
Once I believe I have the capability to raise the required amount, I start to identify the specific investors that will bring the equity, at least conceptually. They don’t have to be the exact people who end up investing at closing because things usually change when you start speaking to investors. Some invest more, some invest less, and some don’t invest at all.
For this step, I list out all the names of the investors whose goals are in alignment with this specific project – which I already know based on previous deals and/or investor conversations. Then next to each name, I write down the amount of money I believe they would invest, which includes a low amount and high amount. That allows me to identify the number of investors I will likely need for the deal.
For this step, I input all the information into an excel document entitled “Money Raising Tracker” that I created from scratch. If you are interested in using my tracker for your deals, email me at email@example.com and be sure to mention “money raising tracker” in the subject line.
Step #3 – Create a One Page Deal Summary
Next, I create a one-page document with a high-level overview of the opportunity and send it out to the list of investors created in step #2. At this point in the process, I may still not have been awarded the deal, while in other cases, I have. However, if I haven’t been awarded the deal, I would feel comfortable sending out the one-pager to investors anyways, as long as the contract is scheduled to be in place in a few days.
The reason why I create the one-page document and send it out to investors is because it let’s me get the opportunity in front of the investors while I work on completing step #4, which is…
Step #4 – Create Detailed Marketing Package
Finally, I will create a marketing package that is more robust and detailed compared to the one-pager from step #3. It has everything from the projected returns to the market information to the business plan to the team and everything in-between.
This document usually takes about a week to a week and a half to prepare. While I am doing that, I don’t want to sit on my hands. That is why I send out the one-pager with the high-level overview of the opportunity so I can gauge the initial interest of my investors.
One additional step I take on my deals is hiring a videographer who has a drone. They go to the property and use the drone to record videos, including shots of a birds-eye view, the units, the amenities, and close by retail. Then, we make a video compilation and send it to the investors. It really helps bring the project to life.
Depending on how robust you want the video, the cost can be anywhere from $1,000 to $5,000. But it’s certainly worth it.
My four-step money raising process is:
- Determining if I am capable of raising the required amount of money
- Filling out my “Money Raising Tracker,” listing potential investors and the low and high amount they may invest
- Creating a one-page document that provides a high-level overview of the opportunity
- Creating a detailed marketing package
Finally, I will hire a drone videographer to create an investor video, which is a compilation of different shots of the property and surrounding areas.
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