3 Ways to Raise Over $1MM for Your 1st Apartment Syndication
If you were brand new to the real estate syndication niche, it is unlikely that you would be able to raise over $1 million for your first deal. It would be even more unlikely that you would be able to raise over $1 million for both of your first two deals. However, a client of mine, David Thompson, was able to accomplish this improbable feat.
David is also one of many speakers who will be presenting at the 1st annual Best Real Estate Investing Advice Ever Conference in Denver, CO February 24th to 25th.
In a conversation with David in October of last year, he provided his Best Ever advice, which is a sneak preview of the information he will be presenting at the conference.
What was David’s advice? He explained how he was able to raise millions of dollars on his first two deals by leveraging his natural networks.
David raised over $1 million for both of his first two deals from three different natural networks: personal network, BiggerPockets, and local multifamily meet-ups.
1. Personal Network
David’s personal network includes family, friends, and work colleagues. These are the individuals that already knew him AND knew about his real estate background.
Before raising money these two deals, David already had real estate experience
- Over 5 years of experience purchasing single-family residents
- In a previous career, he managed a $2.5 billion investment portfolio and raised over $1 billion in funds for acquisitions.
Needless to say, his personal network already perceived David as a successful investor.
Within this network, the two main money raising avenues were his wife’s network and a past business associate:
His wife’s network was a natural path because she knew many people that were already interested in real estate and had cash readily available. Also, she had already built trusting relationships with these individuals.
The past business associate is someone that he used to work with in the high-tech sector. This is David’s biggest contributor.
Advice in Action: If you have been or are currently involved in the high-tech, legal, or medical industry, this is a gold mine for raising money. Many of those people are making good incomes, but they likely don’t have the time to be active in real estate investing. However, they are savvy enough to understand that real estate is an important and effective method of investing.
BiggerPockets was another network that David leveraged to raise money. Social media outlets, like BiggerPockets, that focus on real estate education tend to attract investors who are actively looking for opportunities. While David couldn’t advertise for his specific deals, he was able to portray the same message by posting valuable content and creating a strong bio page. As a result, whenever he posted content to the forums responded to another real estate professional question, investors that view his profile would know that he is a real estate syndicator that raises money for his deals.
3. Local Multifamily Meet-ups
The third network that David leveraged to raise money were local multifamily meet-ups. Although, he expected to be more successful at raising money at meet-ups than he actually was. It seemed as if this would be an event that would naturally attract investors. However, David discovered that many of these people wanted to be active in real estate, rather than passive investors. Also, many of them weren’t accredited investors.
Now that we’ve learned David’s three go-to money raising networks, let’s dive into the actual deals!
Deal #1 Money Raising Breakdown
For David’s first deal, he had 13 total investors.
In regards to the percentage of dollars raised from each of the three main networks:
- Personal Network = 70%
- Wife’s network = 35%
- One past business associate = 35%
- BiggerPockets = 25%
- Local Multifamily Meet-ups = 5%
Interestingly enough, the number of investors from David’s wife’s network and BiggerPockets were essentially the same. However, the amount invested differed. David believes this difference can be attributed to the existing level of trust he had with his wife’s network. Since BiggerPockets is online, those investors didn’t know as much about him or his background, aside from the information in his posts and bio. So it makes sense that they would invest less on average.
Another interesting point: David didn’t have much success with referrals. He asked for a few but didn’t feel confident enough to ask for too many since it was his first deal. However, he believes that referrals and repeat investors will make up a larger portion of the money raising pie moving forward.
This was experienced first-hand when David raised money for his second deal…
Deal #2 Money Raising Breakdown
For David’s second deal, he had 15 total investors. Of the original 13 investors from the first deal, 5 were repeat investors for the second deal.
In regards to the percentage of dollars David raised from each of his three main networks: his wife’s network, the one business associate, and BiggerPockets accounted for over 90%.
Advice in Action: As you can see, for David’s first deal, 70% of the money raised came from 2 networks. For the second deal, over 90% came from 3 networks. Therefore, David recommends that you focus the majority of your efforts on the natural paths that result in the largest percentage of money raised. Spend a much lower amount of your time focusing on the remaining 10%-30% that come from many other misc. sources.
David Thompson was able to accomplish an improbable feat for his first two multifamily syndication deals: he raised over $1 million for both deals. He was able to do so by leveraging three of his pre-existing, natural networks:
- Personal Network
When raising money in your personal network, David recommends finding people who are in the high-tech, legal, medical, or similar industry because they likely make high incomes but don’t have the time to actively invest themselves.
To raise money on BiggerPockets, since you can’t actively advertise deals, instead, David advises that you frequently post valuable content and create a strong bio page that explains that you raise money for multifamily deals.
- Local Multifamily meet-ups
David’s third money raising network was local multifamily meet-ups. However, much to his surprise, they were the least successful of the three.
Want to learn more about raising private money for your deal, as well as a wide range of other real estate niches? Attend the 1st Annual Best Ever Conference February 24-25 in Denver, CO. It’s the only real estate investing conference whose content and speakers are curated based on the expressed needs of the audience. Visit www.besteverconference.com to learn more!
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