JF2280: Raising Capital Fast in an Efficient and Scalable Way with Hunter Thompson #SkillsetSunday

November 29, 2020 | Joe Fairless | 00:27:09

JF2280: Raising Capital Fast in an Efficient and Scalable Way with Hunter Thompson #SkillsetSunday

Hunter was fortunate to start his career in the wake of the Great Recession. At that time, he surrounded himself with great partners and educators. As a result, Hunter built his first company around his personal investment strategy. He was a sole investor at first; now he has hundreds of investors.

Hunter shares his experience in raising capital quickly and efficiently. Time is often the most important determining factor to close the deal. Listen to this podcast episode to learn how he closes deals within 30 days, having a line of prospective investors ready to wire the money in.

Hunter Thompson  Real Estate Background:

  • Founder of Asym (A-Sim) Capital, a private equity firm
  • He has raised more than $30 million in private capital
  • 10 years of real estate experience
  • Current assets under management of $100MM CRE
  • Previous guest on episode JF2028
  • Based in Los Angeles, CA
  • Say hi to him at: www.5millionin30days.com 

Click here for more info on groundbreaker.co

Best Ever Tweet:

“Attract, educate, nurture, and close” – Hunter Thompson.


TRANSCRIPTION

Theo Hicks: Hello, Best Ever listeners, and welcome to the Best Real Estate Investing Advice Ever Show. I’m Theo Hicks, and today we’ll have a repeat guest Hunter Thompson.

Hunter, how are you doing today?

Hunter Thompson: Hey, thanks again for the opportunity. Much appreciated.

Theo Hicks: No problem. Thanks for joining us again and looking forward to our conversation. Today is Sunday, so this will be a Skillset Sunday episode, where we talk about a particular skill set that our guest has. And today it’s going to be about raising money, more specifically how Hunter was able to raise $5 million in 30 days, in one month.

So before we hop into that skillset, a little bit about Hunter’s background— he’s the founder of Asym Capital, a private equity firm, and has raised more than $30 million in private capital. He has 10 years of real estate experience and the current assets under management for his company is $100 million. Check out his previous episode, which is Episode 2028. He’s based in Los Angeles, California, and the website that he’s giving out today is 5millionin30days.com.

So, Hunter, before we jump into the skillset for today, can you just give us a quick reminder on your background and what you’re focused on?

Hunter Thompson: Yeah, so my background is really as a passive investor. I was very fortunate to start my career in the wake of the Great Recession, and I think a lot of people looking at the graph right now and go, “Oh my goodness, how great would it be to be able to buy in 2009 or 2010!” I can tell you, it was not as great as the chart looks because when you can’t see the rest of the chart, it looks like a terrible spiral death circle of foreclosures and your whole family is telling you that you’re insane.

However, the reason I say I was fortunate is that the market acted as a really massive filter for bad ideas when it comes to investing. So starting my career at that time, I was very fortunate to surround myself with some very sophisticated investors, operating partners, institutional actors that guided me towards the world of syndications and kind of allowed me to leapfrog some of the more beginner strategies that are employed frequently here. So I built a company around my personal investing strategy and went from one investor, me, to five, to 100, 200, and like you said, raised about $30 million. Actually, the number is now $35 million because of what we’re going to talk about today, but that’s a little bit about my background.

Theo Hicks: Thanks for sharing that. So yeah, let’s jump into this skill set. So you raised $5 million in 30 days. I guess my first question is, was this something that was kind of like something bad happened that you needed to quickly raise capital or did the deals need to close in 30 days and you needed to raise capital that fast?

Hunter Thompson: It’s actually a good question, because I didn’t really think about it until after the fact. We actually had plenty of room in the offering; it was an open fund that was not an evergreen fund, it was open on a rolling basis. And it wasn’t our most successful raise; we raised $5 million in 72 hours once. But the thing about 30 days stuck with me because of the fact that most deals that are not an open fund, for example, are extremely time-bound. And I feel like the time component is something that doesn’t get talked about enough. I wrote a book about raising capital, Raising Capital for Real Estate, by the way, and I put everything I know into that book. But I didn’t really focus on the time.

And the reason I say this is that the time can be the most important determining factor in whether or not you actually close the deal. And there are so many people out there that “could raise money”, but their real concern is being able to raise it in a 30 day period; most escrows – let’s say 90-120 days. You need that money to hit the bank account in day 30, day 45 and you need to be confident you’re able to do that or you will burn some relationships, or be too scared to go under contract.

So the way that we raised this money, and I’ll talk about all the strategies and tactics that we implement to do this, but the only way that I see that you can actually effectively confidently know that you’re going to be able to raise money is to do the opposite of what most people think about when they think about raising capital, which is chasing people around, trying to convince them to invest with you. I tried to do that, if you anything about my background, you know, I failed miserably on my first capital raise and just basically got laughed out of a room; I had to text my wife after the fact. And my current wife and the woman at the time who was just a friend of mine, quote, aka I was chasing her around for years on end, I had to text her and say, “Look, I was supposed to raise a $500,000 or $1 million and ended up with the total [unintelligible [00:07:47].27].” It’s one of the most embarrassing moments in my career.

But what’s happened between that time and now is that I built a fairly significant infrastructure to attract leads, nurture them through educational content, really create an educational platform so that thousands and thousands of investors are attracted to our firm. And then once you send that email out and that great deal is finally available, boom, the wires start coming in very, very quickly. So that kind of inspired me to create the summit, which is the 5 Million in 30 Days Summit and we’re going to have a bunch of speakers talk about different strategies, but that’s kind of the background.

Theo Hicks: Perfect. So the idea behind this is that once you put a deal under contract, that 30 days is from contract to when you need to have all the funds wired into your account for closing the deal. Correct?

Hunter Thompson: Exactly. And there’s so many people that are stuck—well, first of all, 5 million is consequential, right? Because if you have $5 million and you leverage it two to one, let’s say you can buy a $15 million piece of property. In most markets that’s 150 units, 200 units or more. So from my perspective, outside of the institutional space, that is where the elite players in this space play.

So a lot of people are asking, you know, “How can I get to the next level?” They may have had success raising from their friends and family to the tune of $500,000, and that’s a really confusing way to have success because it gives you a green light in a direction that’s a dead end. Because there’s a big difference between half a million and five million. And the difference is if you know some wealthy individuals, you can raise $250,000 or $500,000. But in six months, when you want to do a bigger deal, you go back to those same people, most of them aren’t ready to transition their whole portfolio into real estate.

If you go back to your uncle, for example, that’s made one real estate investment with you and you go, “Hey, I need another 50 grand,” they’re going to think you lost the first 50 grand. So it’s really a big hurdle, because I want people to be able to get to that elite level so we can help get money out of the stock market and invest in these deals we love so much.

Theo Hicks: Perfect. I like that you said that big difference between raising $500,000 and $5 million. What are some tactics that you’ve found to help people get to that elite level, to go from the family and friends who might invest in one deal every couple of years to being able to do multiple deals in a year and do these bigger money raises?

Hunter Thompson: I think, first of all the mindset shift from going out to try to get someone to invest with you – it cannot be overstated. The shift is from thinking of yourself in the middle of the circle and running around trying to find some rich uncle you haven’t talked to him 10 years, and convert him into becoming a real estate investor. You can do it. The problem is, it’s not replicatable. It’s not scalable. It’s not something that’s going to actually help you achieve your goals, which is creating multi-generational wealth through real estate.

So the framework, if you get nothing else from this short interview, the framework itself is a big shift. And I talk in my book about the stages are attract, educate, nurture and close. And I’ll kind of give some details into each of those. So attract – I think that a lot of people underestimate the value of building their email list and how powerful that email list is. We focus on podcaster — I’m a podcaster, as well, and I’m sure a lot of listeners are as well, which by the way you should be and if you haven’t yet, make the $30 investment in a microphone and start doing it, start putting out content. Trust me, the risk-return ratio on that $30 investment is very asymmetric.

But once you have people listening to your podcast or looking at articles on your website, or just engaging with you on LinkedIn, it’s so critical that you take them away from those platforms and get their email address. That’s the beginning of your real company.

So if you’re listening to this and you have 100 people on your email address, the goal should be to get to 1000. If you have 1000, you should be able to get to 10,000. And we’ll talk about why in a second. There are some confusions as far as how to do this. If I go to someone’s website and I see a call to action, which is for a phone call, let’s say, that is such a massive, massive undertaking, and it takes so much credibility for someone to take 30 minutes out of your day to call you. And also it shows that you have the 30 minutes, which is kind of a low credibility kind of thing to do.

So what I would suggest, definitely take the time to write your 5000 or 10,000-word ebook on one particular topic, hopefully that’s evergreen, and exchange that email address for that content.

Something else I would say recently, I have the tendency to try to give all the tactics away as possible. And that’s perfectly reasonable after you get the email address and after you kind of nurture the relationship a little bit. But something that I’ve had much more success with is actually tapping into the reality that when people give you their email address, the first thing they want to know is, is this person credible and how quickly can I establish that credibility? So rather than requiring them to read 5000 words, I have had much more success with things like due diligence checklists or 100 questions you need to ask about real estate investing, or anything like that where they can download it, instantly get that value, instantly understand credibility and go boom, “I’m going to be opening this guy’s emails for the next hundred years.” And the third email can be that 5000-word ebook. So those are just a couple of ideas. I’d say that the lead capture mechanism is critical. Just viewing your list as the way to scale your portfolio is important itself.

And we kind of transition into the educate stage. So you’ve got the email address. Now it’s time to provide some kind of potential for interaction on a daily, weekly, monthly, quarterly, annual basis. So where that is, is taking long-form conversations, chopping them up, putting in an Instagram post on the daily basis, let’s say a weekly newsletter, and the potential to opt in to a weekly newsletter, and quarterly updates for things like their investments, of course, but also changes to the market, potentially other podcasts that you’ve been on… And then as an annual update, we do an annual conference. And I know that Best Ever does as well. It’s an excellent way, because actually, once you’re doing this, it’s not only the time – the cadence of the time is important – but also the senses. So some people like to learn auditorily, some people like to read, some people will never read, will only listen to 100 audiobooks at 3X speed, and then some people want to go in person and go to a conference, can’t do that in 2020. But you’re giving the potential for all those senses to be touched.

Okay, I’m halfway through so I just want to take a second before we move on to the next ones but the first stage is attract and then convert to email is just so critical, and then it’s just about nurturing those emails.

Theo Hicks: I love it. Keep going with the last two, nurture and close.

Hunter Thompson: So nurture is something that it also can be done in a way that’s coinciding with educate. But I really want to just smash the credibility pedal all the way to the floor. So in the summit that we’re talking about, we’re going to have people come and talk about public speaking, strategies for how to deliver and communicate really complicated matters in an effective way, that when you look at the median of people can understand, but also feel like you’re intelligent. That’s a very challenging skill.

Neal Bawa who I’m sure has been on the show before, one of the best public speakers I’ve ever heard. I’ve never heard him speak about public speaking though, so he’s going to be talking about that. But appearing on other podcasts, how do you do that?

One example that talk about in my book is just creating a Google Form, inputting the top 200 Real Estate podcasts in that Google Form through a VA, sorting by number of reviews, starting at the bottom, meaning the lowest number of reviews and sending out emails to them, because they’re more likely to have you on your program and then working your way up. This is just a way to be seen in a way that’s going to nurture your leads. So we’re all working towards this close stage and we’re going to talk about in a second… But all of this work allows you that when you do finally put a deal out, it becomes oversubscribed really, really quickly. So there’s just so many things about this. But people are hesitant to do a lot of these things because they don’t see the dollars being printed.

But the truth is, I don’t spend my time trying to convince anyone to invest with me. I want to focus on smashing the credibility all the way up, so that I never have to do that. And it may sound like an infomercial if you’re still working towards that, but I can tell you, that is the case. I never tried to be a pushy salesman. It doesn’t work. It’s not scalable, it’s not replicated, it’s not going to help you. So there you go.

Theo Hicks: So for the nurture part, for the credibility, you said that going on other people’s podcasts is what increases the credibility of you.

Hunter Thompson: Yeah, and I’ll give you another tip on this kind of stage, because I think it’s really important. So networking events. And I know, again, during COVID there hasn’t been these, but this historically has been extremely powerful for those who focus on it. If you are going to an event, you need to remember that you’re in a sector which has the potential to be very lucrative. Warren Buffett, Carl Icahn, all these people have a lot of capital in real estate for a reason.

So seeing a $25 ticket price for a networking event can have the effect of people going, “Wow, I only need to get $20 worth of value, and I’m great.” But if you’re taking four hours of your time, you need to get thousands of dollars of value. Because this is a game where we’re standing to making thousands 10s of thousands, millions or 10s of millions of dollars. So you don’t want to substitute your four hours for $25. So when you go in with that mindset thinking, what ideas can I get that are going to give me thousands of dollars of value? What contacts can I get that are going to give me thousands of dollars of value?

And most importantly, when I’m talking to someone, I want to listen for the concepts, ideas, books, resources and other people that I can connect them with, to give them thousands of dollars of value. Because if you’re able to do that, the next time you come to that same networking event, that person is going to want to reciprocate. And then all of a sudden you walk into a room and everyone’s trying to give you the value and give you the context and now, that nurture mechanism is just going on itself like a snowball and it’s very, very powerful.

Theo Hicks: I love that second one about giving thousands of dollars of time. And we’ve talked about this on Syndication School a lot, about always trying to find ways to add value to other people. We’ve got a blog post about how to approach conferences, and how to make one good relationship every day and then follow up with that person based off of the conversation and add value to their business. So I could not agree more with that last one, because as you mentioned, it’s like a reciprocal positive feedback loop type of thing.

Hunter Thompson: 100%. And I’ll actually give a shout-out to Ben who helps produce Best Ever and I didn’t even realize this until you said it. But Ben is actually coming to the summit to speak about creating conferences as a way to nurture your clients. So I say we get the Best Ever speakers, literally the best ever in copyright manner. Ben is actually speaking on that topic. So I’m really looking forward to it.

Theo Hicks: Awesome. Alright, so step four, is to close.

Hunter Thompson: That’s right. This is what most people focus on when they’re starting the business. They start at the end and they don’t succeed because they’re starting at the end of the process. And by the way, when I say “they”, I mean me, right? Because I mentioned I got in a room of $30 million in net worth, gave a presentation that I would be happy to give today and got a total goose egg, right? So I’m guilty of this too, but it should only happen once.

So here’s why. If you’re in a room of 10 people and you are reasonable close and salesman, you can probably close 10% of that room. So if it’s 10 people, it’s one person. Now, what a lot of people do is they make the mistake of spending all of their energy, focusing on getting from a 10% closing ratio to a 20% close ratio, which by the way, would be insane and incredible, 100% increase, basically. But the issue there is that, that’s going from one investor to two if you’re in that room and that’s not consequential. I’m sorry, no disrespect to myself 10 years ago, but that’s not going to help you. The totality of your energy should be focused on getting out of that room and getting into a room of 10,000 people in it or an email list with 10,000 people. And if you already have an email list with 10,000 people, it should be, what’s the goal to get to 100,000?

And here’s why. Even if your close ratio goes from 10% with 10 people to 1% at 10,000, you’re still talking about 100 investors, let’s say with a $50,000 minimum aka $5 million in 30 days, that’s how you do it. That’s how this is done, not with different objection handling type of stuff, those that can help. That’s not the way the business becomes scalable. So I do have a keynote at the summit called Closing Strategies for High Net Worth Clients. And there’s one tip in there that we increase our average investment size by 33% by just one simple phrase. I can’t give it away now, you’ve got to go to the free summit to hear it. But I’ll give you a chip that is actionable immediately, which is time framing that Oren Klaff talks about.

During the close, especially the first call that you get on with the investors, once it’s established that yes, you are the person that they anticipated calling and such, I would just confirm that the call is scheduled from 2:30 pm to 3:00 pm. And that you have another call that’s right after that, that’s going to start at [3:00], so that you have to go. And this just makes everything after that, even if you blow it after that, it’s going to put you in such a better position because they know you’re not going to drone on and on and on. And perhaps more importantly, the credibility is much higher, because it shows that there’s a high demand for your time.

So I go into a lot of details in terms of that keynote, but really is just about outlining the process, ensuring that you’re communicating effectively and then any resources that you mentioned—oh, I recently had a question about interest rates and housing prices. I’ll send you an article that I wrote about that topic, smashing the credibility forward again. I’ll email them right after the call.

So those are just a couple of tips. Oh, wait, one more tip. And I know I’m giving away some tactics right now. But this is such a strong tip that I almost didn’t put it in my book, because it’s so powerful and 100% true. Giving a $30 to $50 gift to your high net worth investors on an annual basis is likely the best bang for your buck in the whole industry. You could certainly have an investor reinvest with you, solely because of a wireless charger that you sent them with your brand on it. So spend 35 bucks or 50 bucks after the close and you’ll see why we don’t have to do a lot of convincing for our investor base. So hopefully that helps.

Theo Hicks: Yeah, Hunter. I really appreciate you coming on here and giving us kind of the overall picture but also very specific actionable tactics for each of these steps in the process. And I also like when you said that I’ve got this one thing that increased our close rate or money raised, but you’ve got to come to our conference. I’m sure that’s another tactic I’ve heard from, I think, it might have been The Best Ever Conference actually.

And you kind of talked about today, not giving every single thing away, but giving a little bit away and then if you want the full picture, if you want the last answer to that question, the last piece of the puzzle, then you need to take this action. So I guess to wrap things up, what is that action? How can we sign up for this conference?

Hunter Thompson: Well, here’s the big upsell. So it’s a free summit and you can get a ticket for free at 5millionin30days.com. And it is some of the G.O.A.Ts, like I said, Ben’s going to be speaking, Bridger Pennington is going to be speaking, Jake and Gino is going to be speaking, Neil Bawa, Kathy Fettke, all these legends are going to be there but specifically to talk about raising capital, which means it’s very curated if you’re interested in the topic. They’re all going to be talking about one particular strategy so not; what’s your background? Why do you like real estate? But one thing; give me every detail. Okay, 30 minute interview, boom. So check it out at 5millionin30days.com.

Theo Hicks: Perfect. Everyone listening, that will be in the show notes, so you can just click on that link and go straight there. So, Hunter, again, I really appreciate it, how you talked about the basically four-step process for raising money. And the last step being the close which is what a lot of people focus on at the start and skip the other three steps which is not going to lead to success because you said that the goal here is to not increase your closing rate, but increase the number of people who are being presented your deals. That’s how you get the $5 million in 30 days, that’s the secret sauce.

And then you said that you need to increase that exposure, you need to focus on the first three steps, which is to attract people, which starts with creating an email list and making sure you have a nice carrot to get people to sign up, but not too big of a carrot and so we kind of work your way to the bigger part. So start with maybe a quick checklist to get their email address and eventually down the road, give them that big free ebook. And then from there, it’s education. So figuring out ways on a daily, weekly, monthly and annual basis to make contact and interact with your audience through various educational resources and you gave examples of that. Nurturing focuses on credibility and so getting other people’s podcasts and networking events as examples.

And then lastly, you said you can work on the close and at that point, we get some other tips as well about sending them resources if they have a question about something and say, “Hey, I’ve got this article about 1031 exchange that I wrote to learn more about this,” and then sending that gift so that the closing process is that much easier, that much smoother.

So, Hunter, again, really appreciate it. I can definitely tell you a podcast because you’re really good at speaking and presenting these ideas. So make sure you check out his podcast as well. What’s your podcast called?

Hunter Thompson: It’s Cash Flow Connections Real Estate Podcast and cash flow is two words.

Theo Hicks: Perfect. So check that out as well. As always, thank you for listening, Best Ever listeners, have a best ever day and we’ll talk to you tomorrow.

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