The following Q&A was completed as part of our conversational Commercial Real Estate FAQ Interview Series, we hope you find it helpful.
When looking for investors for a multi-family investment property, these investors want to see that you respect risk and you respect their capital. If you’re a novice in investment, and you’re trying to raise a large amount of capital on a large project or multi-family property, investors know that you’ll be taking them down with you. Build a progression of investments first, and have to show them your progression up the investment ladder.
Richard Wilson: And I see so many people fail, like through PitchDex.com or Investor Relations Agency we had someone come in, they had never raised capital before and they wanted to raise a billion dollars for some green energy project. And he wasn’t doing it on some island somewhere, but that’s like the worst yet, when you hear someone doing something in another country, at a billion dollars, and they’ve never even done a million dollar raise before. And I said, we’re just not going to serve you, like narrow your focus and be a capital raiser for something practical. Because you’re going to be unhappy with us because you’re going to fail, and it’s not about knocking who you are, it’s just you’re not going to go into Major League Baseball, even Michael Jordan couldn’t as a very talented athlete go straight to major league team playing. He was in the minors working his way up, and you know, I think if Michael Jordan has to do that and pay his dues, then you can bet you have to in the competitive space of real estate. For whatever reason, it’s a common mistake for people to think “Oh, okay, let’s start with a hundred-plex, or 200-plex, without learning the basics. I think that’s really valuable for people to hear, I appreciate you emphasizing that.
Brian Burke: People often forget, Richard, that investing isn’t about the deal, it’s about you. So therefore you could have the best deal in the world, but if you don’t have the ability to pull it off, no one is going to invest in it. And they have to be able to believe that you can do that. So to your point, if that guy’s never done a raise, it could be the best deal in the world, but you’re right, he’s going to fail.
Richard: Right, right, yeah. Investors really want to see that genuine authentic track record, that may not be 100% beautiful, but shows the progression over time. Versus like “Oh, who is this group who’s doing a 500 unit deal? Did they exist yesterday?” You know? Do they have a team? So I think that’s really important to make sure investors know that you respect and are going to be a good steward of their capital.
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