Mar

An Insider Report on a Private Fund Raising Campaign

By Emily

Greetings!

I know one of the reasons you may have subscribed to this blog is to get a "look over the shoulder" of how commercial real estate investors like my partners and me do business when it comes to raising the buckets of private money we need to fund our deals.

It has been a busy week in the world of fund raising, and this time around I want to share an update on the process we’ve been using for our private money raising efforts for a $1.2 Million loan we’ve been funding for 34501 Quincy LLC. You can use this same process when you’re raising funds for your next deal, be it an $80,000 rehab house or a $10 Million Apartment complex like the one we’re looking at in Texas right now.

(Some of my students in Team Gold Mine are doing their first fund-raising project for a $500,000 residential development project in Colorado and I am so excited to be able to coach them through this process!)

Where we stand with 34501 Quincy LLC

As a recap, Quincy is a large 955-acre commercial manufacturing and office space complex which we purchased a year and a half ago with a 3-5 year hold plan. The bank financing we used to purchase the property has a 2-year balloon on it, so as we approach the 2-year mark, we’ve been looking at refinancing the property with the same lender, paying off a portion of the loan balance (10%) and getting some additional working capital – that’s why we’re raising a million dollars this month.

A few months ago, we decided to do a $1.2 Million fundraising project and started working with our attorney to draft the appropriate documents. According to our company Operating Agreement, we have to give first priority to the current owners/investors for any new private loans made on the property.

We opened up the opportunity to our Class A shareholders with an informative email letter and a Q&A phone call to make sure everyone had the opportunity to learn about the investment and decide whether they wanted to participate in the loan.

After we gave all the Class A investors their chance to invest, we were able to open up the opportunity to people outside the company.

We’re offering great loan terms in order to make the loan attractive and get the funds together quickly and easily.
We also put a deadline on the submission of the funds – April 11th – to encourage people to get their funds in promptly. People who submit funds after this date will not qualify for the higher interest rate investors get if they invest before this date.
To increase security, we are positioning this loan (and collateralizing its payback) in front of all our Class A investors, so the loan money is actually very safely positioned.

After deciding what we were going to offer for terms, and getting commitments from people about what they’re going to invest, (We’re up to $920,000 in verbal commitments on our $1.2 Million goal), we continue to follow up with people personally to make sure that they’re still feeling comfortable with their decision to invest, have read over and signed the paperwork we need, and are sending in their funds in a timely manner.

We also continue to approach new investors to get additional commitments. We still have $270,000 to go on our raise, so the show’s not over yet.

It’s not as hard as you think!

However, raising the funds is just not as difficult as we always thought it would be before we got started. Just last week, one of our board members was talking about the fundraising project in one of his mastermind groups and garnered a $200,000 verbal commitment from someone in the group as a result of the conversation! Wow – talk about having some good wealth lifelines created there.

It just goes to show that you never know who might be interested in investing until you start to share the project.

So, the next time you raise funds remember:

Put together a secure and attractive offering to raise funds quickly.
Have your attorney do all the paperwork (this took us some extra time to finish, this time!)
Start talking up the deal and generating interest.
Follow up with interested parties to make sure they follow-through.

It’s not rocket science, but it does take work! The first time you raise funds is always the hardest. We have a strong belief system around here… We know we can do it easily, but we have to do the work to make it happen!

If you are interested in getting more information about future private investment opportunities, make sure you’re on the list as one of our approved private investors.

Emily

P.S. One thing about our deals is that we always make the numbers and security good enough that we feel confident putting our own money into the deals. We not only invest our own funds, but encourage friends and family to invest as well.

Popularity: 15% [?]

Like what you see? Please share the word!