REL Freedom Podcast

Mike Swenson - Capital Raising Tips After 250+ Units Closed

• Mike Swenson

Share episode

Today we celebrate the closing of our newest acquisition, a 35 unit apartment in southern Minnesota. In addition, we cover some of the most important basics for those interested in raising capital for real estate. We break down the fundamentals of what investors actually want to know before they commit their money. From understanding the difference between equity and debt to navigating basic securities rules, structuring deals correctly, and building trust without a long track record, this conversation offers a clear, practical roadmap for anyone looking to scale through other people’s capital. We also cover how to find and attract the right investors, present deals with confidence, avoid common capital raising mistakes, and build long-term investor relationships that lead to repeat capital and sustainable growth. Whether you’re preparing for your first raise or refining your approach, this episode delivers actionable insights you can apply immediately.


Real People. Real Life Stories. Real Wealth Building. REL (Real Estate Leveraged) Freedom: Founded By Mike Swenson


SUBSCRIBE IF YOU'RE LOOKING TO BUILD WEALTH THROUGH OPPORTUNITIES IN THE REAL ESTATE INDUSTRY

✅   http://relfreedom.tv


GET STARTED INVESTING TODAY AND ACCESS OUR DEAL LIST!

📈 http://investwithelite.com


PARTNER WITH US ON BIG DEALS!

💵 https://eliteadvantagepropertieshq.com


BUILD YOUR REAL ESTATE AGENT CAREER WORKING WITH INVESTORS

👨‍👩‍👧‍👦 http://eliteadvantageagent.com


LEARN ABOUT REL FREEDOM & HEAR MORE REAL LIFE STORIES

🎙️ http://www.relfreedom.com


FREEBIES: DOWNLOAD YOUR FREE FREEDOM FOUNDATION BLUEPRINT

💵 https://www.relfreedom.com/blueprint


LOOKING FOR A REAL ESTATE AGENT ANYWHERE IN THE US? FIND A TOP AGENT IN YOUR COMMUNITY

🏠  http://www.eliteagentreferral.com


JOIN OUR FACEBOOK COMMUNITY

👨‍👩‍👧‍👦  https://www.facebook.com/groups/relfreedom


SUBSCRIBE TO THE REL FREEDOM PODCAST

🎧  Apple Podcasts: https://podcasts.apple.com/us/podcast/rel-freedom-podcast/id1535281574

🎧  Google Podcasts: https://podcasts.google.com/feed/aHR0cHM6Ly9mZWVkcy5idXp6c3Byb3V0LmNvbS8xNDA3NjIyLnJzcw==

🎧 Spotify: https://open.spotify.com/show/5nXA5hLHbDzRwxypc2wLur


LET'S CONNECT

👉  Facebook: https://www.facebook.com/mswenson13

👉  Instagram: https://www.instagram.com/getrelfreedom/

👉  TikTok: https://www.tiktok.com/@relfreedom

🏠   Minnesota Real Estate: https://www.eliteadvantageteam.com


Let's go get some REL Freedom together!

Mike Swenson:

If you want to go fast, go alone. If you want to go far, go together. And so I've always just believed in if we want to go far in our investment journey, I want to go together with people. I want to add value and provide something of value for them. I can go fast on my own. I can control everything on my own and make all my own decisions if I want to, but I want to create something that helps multiple people build wealth and gives an avenue for people to maybe change some of their family trees and do things that they probably couldn't do on their own. And that's the exciting part for me. Welcome to the Real Freedom Show. We inspire you to pursue your passion to gain time and financial freedom through opportunities in real estate. I'm your host, Mike Swenson. Let's get some real freedom together. If you want to get started on your real estate investing journey, make sure you check out our website, freedom throughrealestate.com. That's freedomthroughrealestate.com. We have lots of great information for you on there of how to get started. Next steps to take all of our podcast episodes and content. And so make sure you check that out. Would love to give you uh confidence to be able to take action in the next deal that you do. To get started today, I want to share some really exciting news. So for us, we recently closed on a property. So we're uh coming up now. This episode's being aired the beginning of 2026 and ended the year with a bang with a closing here on a 35 unit property. And so that is now our seventh multifamily deal that we've done or kind of apartment building that we've done, bringing our total to 264 units is where we stand as of the end of 2025. And so it was a lot of work to get to the end and excited to be able to put that in the rearview mirror. And now, really, all the the actual work starts on the property, making sure that we've got everything transitioned over, getting the utilities transitioned over, the tenants. And so our property manager is going to be rolling up his sleeves in a big way and making sure that we're set to go there. So exciting news to be able to have another deal under contract, to be able to finish the year over 250 units. And uh, we already have our eyes set on some other properties here in 2026 that we can get moving on. And so, just real quick, want to talk about this last deal that we did. So, our focus has been looking at assets in in southern Minnesota. Primarily, we like in and around Rochester, Minnesota, Rochester being home to the Mayo Clinic, number one hospital in the world, five and a half billion dollars being pumped into the area over the next 20 years, and rising tide lifts all boats. So, not just in the Rochester area, but in the areas surrounding small towns, um, other areas. We really like that that spot. It's a little less competitive than Minneapolis, St. Paul, a little bit better regulations, should say a little less regulations in terms of tenants and things like that. Obviously, we still have all the Minnesota rules and guidelines, but we just really enjoy that space. And we have a great property manager there that's done a nice job for us, and so we like to continue to find assets there. And so we'll continue to pursue deals mainly in Minnesota. We do have our eyes on other states, but for now we want to continue to do what we do well and double down on the things that we're doing well. 35 units off market, had some work done to it, a lot of updates made to it in terms of the capital expenditures, and so gives us an opportunity to add some value, probably not as much of a value add as what we would prefer. Yet at the same time, we we want to pick good assets and pick things that we think will perform well for us, and so that definitely met the mark. So we're gonna continue to come in, add value, do great property management, update units as we need to, and uh continue to to run those assets. And so that's been a lot of fun. We raised capital for this deal, and the folks that invested were able to take care of some tax advantages here for them, depending on their situation, for the end of 2025. Then we also had some folks that invested with some self-directed IRA money, and so being able to utilize IRA accounts from past employers or whatever that might be. Overall was great. We still have a little bit more to go, but we were able to close and get that done here in 2025. So that's the end of that. Um, like I said, we've got some future deals on the horizon and excited to see what we're gonna do in the future. But I wanted to talk today about uh raising capital. And so as we continue to do that more often, I know people have questions about it, what it's like, what types of deals we raise capital for. And so I thought I would take uh, you know, a quick episode here and just kind of walk through the basics of capital raising for people that might be interested in that, for people that might want to learn a little bit more about it. And I'm constantly learning myself. So, in total, now I think the you know, we've we figured that we've raised over three million dollars in capital, probably closer to four million dollars in capital over the last few years for the units that we've owned. And it's certainly not easy. I know other people that have done deals that have closed here within the last month or two have struggled to raise the funds, have had people back out and things like that. So it's it's not for the faint of heart. And yet at the same time, I believe we're adding a lot of value and providing a lot of great opportunity for people to get invested into real estate. So, today's episode, in addition to talking about the deal that we we just closed here, I want to talk a little bit about capital raising for those people that you know that might be interested in pursuing that. You know, raising capital for real estate, you can choose to use your own funds, right? To continue to grow your own portfolio. There's certainly people that have done that as you add value to property and you're able to get new mortgages and take that money and port elsewhere, you can do that. I like the idea of the economies of scale of getting into larger properties. I feel that there's a little more safety there. Obviously, it's the it's got to be the right deal. And so larger doesn't always mean better. But the example that I give is I used to work with a lot of investors that would buy two, three, or four unit properties, and you get a tenant that comes in, and you know, you've got a duplex and you've got two paying tenants, and all of a sudden one tenant leaves. Maybe you've got to do some updates, maybe they you know have a hard time paying rent or they're not fully paying rent, and so maybe you just have a challenging tenant too. Well, you're losing 50% of your income. And instead, if you buy a property, you know, we've bought some 20, 30 unit properties. If you've got 30 units, you could have two, three, four people that are either transitioning in or out, not necessarily just tenants that aren't paying, because we find that most of our tenants do pay. They might get a little bit behind, but they get caught up. But then at the in, you know, life happens, right? You've got people that are moving elsewhere. As much as we can be the perfect landlord, we know that nobody's lived in that exact same apartment for their entire life. We do have people that live there five, 10, 20, 30 years. However, people are gonna move and that's gonna happen. So turnover is natural. So if you've got 30 units, you can afford to have a couple of units that have some natural transitions, some natural turnovers, and then you still get rent from 27, 28, 29 tenants out of 30. And so there's a little bit more safety there. The economies of scale, you've got depending on the property, probably one roof, one exterior, one water heater, boiler, whatever that might look like, versus if you had 30 units from 15 duplexes, now you've got 15 roofs, 15 exteriors to worry about. So there is a natural economy of scale. And so I like the idea of getting into those bigger buildings versus trying to do it with small multifamily. I've you know interviewed a lot of people on the podcast that get burnt out and run out, feel like they have just a second job doing that, running a lot of single family or small multifamily properties. And so I believe there's a spot in the market to add value to those people that want to be more passive, that don't want to get those tenant calls in the middle of the night, that you know, may not know how to fix a toilet, may not know how to fix a water heater. If you've got a great property management company, they have people on staff that do that. And if not, they have great vendor relationships with people who can do that. We had a water leak on a property recently, and our property manager had other people that he already worked with and said, Hey, I'll call this person, we'll get them in, we'll get it taken care of. And so there's a lot of value there for being passive. And so it's a way to get your investment dollars into real estate without having to take on the job or all of the work yourself. So as I'm talking to people looking to invest, I feel like I come from a place of value at a place of contribution where look, you can do it yourself. What I do, there's there's not a magic pill here for real estate. And yet at the same time, I think there's a lot of value of what we provide. And so we're just looking for people who are looking for those same things, the people who find value in the things that we offer. I don't look at it as sales because my goal is just to show them how investing in real estate can help them get their career goals on track or maybe their investment goals on track. Maybe they're looking to diversify, maybe they're looking for tax benefits, maybe they are looking for cash flow. And so we can help them with that. And so I'm not looking to convince somebody to do something that they don't want to do, and yet I'm offering them something of value. If it's something that's a fit for them, great. If not, no worries. And so that's where for me, raising capital is I'm just I'm adding value to people and providing great opportunities for them. And then through that, we can scale. So, you know, buying as an example here, this 35 unit property for over$2 million. We were able to secure a mortgage for let's call it a little bit over a million and a half. We helped, we did the work to secure that mortgage, to guarantee that mortgage, to work with the bank that get them all the documentation that they needed for that mortgage. And so there's a lot of value in being able to do that. So our investors that come in don't have to worry about the mortgage. They don't have to worry about guaranteeing the mortgage. They can come in and just place capital. So I think it starts with that, seeing the value in what you're doing, because then all the conversation that follows after that is you are providing great value to people, you are providing a great opportunity for people if it's the right fit for them. And so I think starting with that baseline is really important. As I'm talking to investors, you know, I want to focus on what you are trying to get out of this? Are you wanting to be active or are you wanting to be passive? Back when I was working with clients buying small multifamily properties, the investors that I worked with really liked being active. They wanted to learn the business, be hands-on, take care of answering those questions and handling those property management issues because for them, their goal was to quit their job and do this full time. So they were very excited about being active. And so when I started to do apartment buildings and find investors who wanted to invest in apartment buildings, frankly, a lot of the past clients I worked with weren't interested in that. And that's okay because they want to be active versus being passive. Now there's a whole population out there of people that want to be passive because they don't know how to start. They want to get into higher larger buildings, maybe an economies of skill that they can't do on their own, and they don't have the relationships to find the property managers or to secure the mortgage and do all that stuff on their own. So they love the value of working through others and with others. You know, I've always subscribed to it's uh, you know, a famous African proverb. I think if if you want to go fast, go alone. If you want to go far, go together. And so I've always just believed in if we want to go far in our investment journey, I want to go together with people. I want to add value and provide something of value for them. I can go fast on my own, I can control everything on my own and make all my own decisions if I want to, but I want to create something that helps multiple people build wealth and gives an avenue for people to maybe change some of their family trees and do things that they probably couldn't do on their own. And that's the exciting part for me. And that's why I love working with investors in real estate. So you're looking for the right type of investor. Inside of that, there's a couple different ways that you're structuring deals, and you're either going to work with accredited or non-accredited investors. And this is really important. So accredited investors generally are people who have a net worth over a million dollars, excluding their primary home, or have income over$200,000 a year for the last two years if they're individuals, or$300,000 a year if they're uh filing jointly with uh a spouse, or they have some sort of securities license. So accredited investors can invest in deals that non-accredited people can't. And so that's why it's really important to designate. Now, non-accredited investors can invest in deals. That's actually who we primarily work with because most of the people that I know and most of the people that enjoy helping don't meet those qualifications. So you could make$150,000 a year, have a net worth of$500,000,$800,000, and still not be able to invest in certain opportunities. And so I like the idea of providing opportunities for lots of people that couldn't do it on their own. And so that's the part, the helping people part that I really enjoy. And that's why I really get a lot of enrichment out of what I do. And so I work primarily with non-accredited investors. I can work with accredited investors, but it's just the type of deal. So for me, the type of deal that I have, I can't publicly market those deals to people. I can talk to individuals about it, but I can't go take out an ad or make a video of like, hey, here's the deal that we have, come invest in this deal. So everything that I do is just through the relationships that I have with people and work through those kind of off-market types of opportunities where I'm working with individuals versus posting publicly about them. So you'll see large-scale investors post about those big deals, but they're looking for accredited investors. Those deals might have a minimum investment of$50,000,000,$250,000. I'm working with people that that's a little bit too much for them. Maybe they want to invest$20,000 or$30,000, or maybe up to$50,000 or more for those types of deals. So really important to designate who you're working with there and then figuring out what do those people actually care about. For us for apartment investing, I explain it as it's kind of a slow flip. We are adding value to property over time. In Minnesota, we can't kick tenants out, and so nor would we want to. So we are in the leases that are already in place before we take over a property. And so when those leases turn, when there's opportunities to fix up units and raise the rents, we would do that. However, if we've got great tenants and there's you know enjoying the property, they would stay for a while. And so it's kind of like trying to flip a building in the course of five years, is really what we're looking for. So from a return standpoint, you're investing in something for five years with us. It's not like flipping a house where we're gonna get our money back in three months or six months. And so you've got to find people that like that and are okay with that type of investment. And so that's really what we focus on is hey, you're not gonna get your money back in three to six months, you're not gonna get your money back in a year, you're gonna get some money back either if we refinance depending on the deal, quarterly cash flow payouts, or upon the sale of the property. And so those are the ways that you're gonna get paid. And you also have the benefit of the tax deductions or tax benefits depending on your situation. So those are the wins for you while holding those properties. Trust and credibility is really important for these types of deals. So I would say start small and start with you know who you can work with and work with the banks that are willing to work with you with where you're at for your given situation. But everything that we do is based on trust. If people are going to invest with me for five years, they're gonna be in business with me for five years. We own an LLC together, we own a company that owns a property together, and so they can get a hold of me. Hey, how's it going? How are we doing? What's going on? What challenges have come up? And so we get out ahead of that and give people updates on those property, but it's a long-term relationship, and so you want to make sure you're picking people that you're okay working with for five years plus for an individual property. So it's all about finding the right fit. Like I said, I'm really presenting here's the opportunity, here's what this deal looks like, here's how hands-on or hands-off you are, and is this something that's a fit for you or not? If it's not a fit, no worries. We'll go find something else that is a fit for you. Legal things to think about. So if we are raising capital like this in this type of uh vehicle, it is a securities activity. And so there's guidelines that we have to follow. Having a great attorney who understands securities is really important because there are SEC guidelines that we need to follow for this. It's not just, hey, wire me the wire me the money and we'll send it back to you when we're done. So we're issuing K1 statements every year to our investors based on, you know, the money gained or lost, and that's paper loss in most cases for their tax purposes. And then we have to be very open. We have to keep all those records, sign private placement memorandum documents for those investments. So there's a lot at stake there. And so you've got to make sure you've got your I's dotted and your T's crossed, and you're making sure that you're following all the guidelines. And so legal stuff we can talk about at a different time, but just understanding there is legal ramifications, there's guidelines that you need to make sure that you're following. How are the deals structured? So, what happens is you know, the way that I describe it is you've got two sides of a table. So if we're raising capital here for a syndication, you've got the general partner side sitting at one side of the table. These are the people that are making all the decisions, putting together the plan, securing the property, working with the bank, working with the property managers, doing all the active work. And then at the other side of the table, you have the passive investors who are just putting up the capital, putting their money down for the opportunity to invest in these types of properties. And so those limited partners don't have the ability to make decisions on the big things that that as they relate to the property. And so that's where going back to finding the right fit. You're looking for an investor that that's what they want. They want to be hands-off, and that's where we succeed very well. And so there's going to be different types of returns. There's all different ways to structure the deal. You can do preferred returns, you can do, you know, certain percentages based of on cash flow, based on the sale. If a property hits certain thresholds, you can waterfall certain types of opportunities. So there's lots of different ways to structure it, but it's going to be some sort of you're you're kind of buying into what the plan is, and it's up to those general partners to orchestrate that plan. Um, some sort of, you know, return, guaranteed return, preferred return, payout for, you know, quarterly returns, whatever that might be. And so you're putting together what that is, you're dividing the percentage of the property based on kind of what's something that's going to be enticing for an investor. So we start, we kind of back out what would be something that would be intriguing to an investor and put together a plan based on what might be a fit for them. And then, you know, that's that's how we run the numbers. And then we only move forward with the deals that make sense. If there's not enough meat on the bone, we're not going to move forward with a deal and take all of our time and energy to be able to work with an investor if there's just not a lot of meat there, there's not a lot of excitement there for them. So that's what we're doing for that. Building trust without a big track record. I think that's the thing that we've gained over time. We've now done seven multifamily deals. As I mentioned, 264 units. That didn't happen overnight, and it didn't happen in one fell swoop. So it takes time to build that resume. I tell people it's just like starting starting a new job or you just graduated from high school or from college, you're building your resume. I'm working with people that trust me for the experience that I had when we did our first deal. And then I'm finding investors on our second deal where we said, hey, here's the deal we did previously. Here's how it's going. Here's what we're doing right now. We get to the third deal. Hey, this is our third deal. Here's the other two. Here's how they're going. This is what the opportunity is for this deal. And you keep stacking more and more. There's investors out there, accredited investors that won't touch anything less than 264 units. And we've done that over the course of now almost three years and seven different deals, but we're slowly building our resume. We're slowly building that experience and we're building that trust and credibility with our investors to show hey here's what we're doing. Here's why we think it's a good fit for you and here's why we think working with us probably makes sense versus doing it on your own. And so that trust and credibility and that track record is really important. And so we're open and honest with our investors with where we're at. We have had some properties that have had some challenges. We're working to overcome them and so we're sharing here's what what here's what's happened. Here's what we're doing so that it doesn't happen again. Here's what we're learning so that future deals are better than deals we've done in the past. And so we're getting better. Just like professional athletes start out maybe their rookie year they're okay. They're getting better. Maybe their second year a few more things click and then their third year they get a little bit better. Their fourth year they get better and maybe eventually they become an all-star but it takes time. And so it's the same way for us. We're getting better we're finding better deals and as we continue to grow we can leverage that experience into bigger and better deals as well. So a you know a hundred unit building versus a 50 unit building versus a 25 unit building we can get to some of those bigger opportunities based on the experience that we've had and what we've done in the past. And so we're building that resume just like everybody else's transparency is really important like I mentioned every quarter we share with our investors how things are going. We have a quarterly report that we send out to show them here's where we're at, here's the projects that have been completed. Here's what's still on the docket here's when we're considering a sale here's when we're considering our quarterly payouts and what that looks like. And so we're trying to be open and accountable to people to set good clear expectations for them so they know we're going to do what we say we're going to do and we're not just trying to pump this up and then run away right it's all about building that trust and that credibility with people. So through that, you know, we find investors from our personal network versus referrals creating great education based content like this the podcast finding people who are excited about the things that we're working on and just having conversations. I view most of my role as education based. I'm telling people here's what we've done here's why we do it here's why we're excited to do it. And if you want to learn more about it let me know. And if not if you'd rather continue to invest in other areas that's okay. And so we're looking for the right people like I said we're not trying to convince people to do what we want them to do. It's just finding the right fit. And so those relationships are really important. I'm not pitching people I'm not selling people on anything I'm just educating them. And sometimes it takes time to understand that education. And so you know I I kind of use the example of you know if if a one is I'm not at all interested in investing in multifamily real estate and a 10 is I love investing in real estate a lot of people are probably at a two three or four and my job is to help them understand you know what it looks like to be at a five or a six or a seven and just give them more education to help them make informed decisions on potentially moving forward. And if you want to do it on your own that's totally fine. It's okay with me. And so I'm just education based no pressure type of situation. Here's what we've got if it excites you great if not no worries. And so that's kind of been my approach which I I enjoy that approach that's more of who I am versus feeling like a salesman. And so the people that excited about that probably resonate with that type of uh presentation. And then when we get deals presenting the deals we put together a good plan here's what we're going to do here's what those five years look like here's the financials here's the potential returns here's the risks here's the opportunities and we'll keep you informed along the way and uh that's how we present that we do a webinar we do a slide deck we have the PPM document the private placement memorandum and people consume that content make an informed decision reach out with questions and then decide for themselves if they want to move forward and so that's simply how that process works. We put together that plan and because we have relationships with these people this these aren't none of these investors are new people they're people that we know in some way shape or form and so hopefully they feel empowered to ask great questions and to move forward on things that are a good fit for them. And so that's really what the presentation looks like it's just a little webinar and open it up for questions and then it's answering people's questions over the next week or two or three before that opportunity fills up. It takes time and it takes patience to be a capital raiser. You're understanding that this is not everybody's priority while it's I always say well it's my priority to have people invest in these deals so we can get them closed on time. It's not necessarily their priority if they have a family vacation or a busy work schedule they're not going to be as timely in getting back to me. They're getting back to me on their timeline not on my timeline. And so things like setting up self-directed IRAs takes time because they have to fill out paperwork. They have to work with their current plan whoever their money's with right now transition that over that company takes time. There's a lot of things out of our hand or you know people have a baby and all of a sudden now their their money that they thought they'd have is going to go towards funding a you know new new nursery or new all the baby equipment that they need to buy or maybe they're renovating their house or maybe they have a kid going to college. Maybe their spouse or a partner has something happen in their life and they need those funds. And so life happens and it happens on their timing and their priorities, not my priorities. And so I have to have a funnel of enough people that are excited to say yes and move forward with our properties independent of what those life circumstances are. And so we have found ways to maybe move closings back or find funds to get to closing to allow some of this life event stuff to sprinkle back in after closing but we're operating on their priority and their calendar and so if they're busy at their job they're not going to get back to us on time. And so it's my job to just follow up stay present stay available to help them for when they're ready to ask those questions and provide answers for them. So that's a big learning for me is is kind of knowing how to work with people, how to work with people on their timing and doing my best to communicate as much as possible. It's a long-term relationship business. I think that's kind of the final piece too like I said we're in this for five years with people. If we're going to hold an apartment building with our investors for five years we're in it for five years. And so you've got to be present transparent helpful getting back to people as as good as possible and help them see the bigger picture because our goal is we want people to continue invest with us. We want people to continue to refer people to us that want to invest with us. And so it's a relationship business that takes time takes patience and it takes good clear communication with people so there you have it. There's my thoughts on capital raising at least as we stand right now what I've been able to do for the first 264 units and we're excited to see where that takes us in the future. So if you have any questions you want to reach out to us go to our website freedomthroughrealestate com check it out read the articles reach out to us and we'd love to be able to help you with capital raising questions that you have or if you're interested in investing in future apartment deals with us reach out to us and let us know. Thank you so much. Take care have a great day