Capital Raising 101 - My Proven 11-Step Process For Raising Millions

🚨 You Don’t Need a Website, LLC, or Pitch Deck to Raise Millions for Real Estate — and in this podcaswt, I’ll prove it. 🚨

If you’ve been spinning your wheels trying to “get everything set up” before you start talking to investors... stop. That’s the fast track to missing deals and staying broke.

In this training, I walk you through the exact step-by-step process my clients and I have used to raise tens of millions in private capital — without begging, chasing, or scrambling under pressure when the clock is ticking.

✅ You’ll learn:

• The BIGGEST myth that keeps new investors broke
• Why now is the time to start building your capital base — even if you don’t have a deal
• How to move investors from cold → warm → HOT using simple, repeatable strategies
• The magic question that gets investors saying “I’m in” (without you pitching anything)
• How to use the Four T’s to position yourself as the solution every passive investor is looking for
• Where to find capital outside your current network — even if you don’t know anyone with money
• How to build investor trust at scale using low-pressure conversations and social media

📈 Whether you’re trying to raise your first $100K or your next $5M, this video lays out a battle-tested roadmap you can start using TODAY — without any prior experience or a huge personal bankroll.

👉 Stick around until the end, where I share the #1 mistake most new capital raisers make that kills deals before they even start — and how you can avoid it.

Transcript

0:00

Hey, welcome to the Go Big Live Real Estate Investors podcast. I'm your host, Matt Drouin. Today I'm going to walk you through my proven step-by-step process for raising capital from private investors for your first commercial income property and your first several commercial income properties. So let me set the tone for you right upfront. This is going to be educational and no nonsense, and this is based upon my several years of making mistakes in raising capital, I'm going to give you actionable step-by-step instructions on how to do this and how to start it now, because that is very, very important. It's gonna be a common theme of this training video. So I'm not here to sugarcoat or spew fluff. I'm here to bust myths, drop truth bombs, and show you exactly how my clients and I have raised tens of millions of dollars in private capital for real estate deals, all while having a few laughs about the usual nonsense that I see out there. That you're probably seeing out there in the YouTube University universe, that, just drives me nuts about this industry. So if you've been told you need a fancy LLC or a slick website or a 50 page pitch deck before you can even think about raising money or hiring a expensive syndication attorney strap in, we're about to turn that idea on its head. By the end of this episode, you'll know how to, get investors eagerly lining up to fund your deals without the last minute scrambling and without the corporate bells and whistles in the process, and without wasting time on things that don't actually matter to raising money. But first, let me give you a quick overview of what this episode is going to be. About, and stick around because later in this episode, I'm going to reveal the single most important question to ask a potential investor that can guarantee you they'll be ready to write a check when you've got a deal. It's a question. 99% of rookie investors never ask, but it makes all the difference. Here's the first big myth. I need an LLC website pitch deck. I need to be in compliance with the SEC before I can raise money. We're gonna kick off this with stating that that myth is an absolute lie and it's probably holding you back right now as you perseverate over all the details trying to educate yourself about this. This sound familiar? It's probably something that has been going through your head. If you've ever done that, don't worry. You are not alone. But I'm here to tell you as politely as possible. This is complete and utter BS legal entities and pretty PDFs do not raise money. People do. the obsession with looking perfect on paper is just a fancy form of procrastination. It's fear disguised as preparation. An LLC and website have their place eventually, but they are not prerequisites to talking to investors. In fact, focusing on those things too early on can actually hurt you because your burning time and money on paperwork and pixels instead of building relationships and finding deals. you start spending so much time perseverating over these details about the website, the business card, the logo, the legal compliance, you end up burning up energy, right? A lot of times people can actually give up before they even start because the capital raising process is actually the hardest process of the entire business, okay? So you have to focus on putting in the work, but don't take my word for it. Bridger Pennington is a guy I've been following for a long time. He's helped over 300 people launch investment funds and literally teaches the students to leave the legal setup for last. He says there's a reason legal is the fourth and final step in his fund launch formula. So you don't need to spend$30,000 and a year of your life launching a fund that nobody wants to invest into. Instead, he advises finding an amazing deal. Frame the deal, go raise capital and then handle the legal during that capital raising phase that you'll quickly find out if investors are interested and if not, you just save yourself a ton of time and cash by not setting up an empty LLC. in other words, don't put the cart, before the horse, the deal and the investor interest. Think about it. Nobody invests in your LLC paperwork. No investor has ever said, wow. Jimmy has an LLC and a website with a CEO domain. Here's a million bucks. No, they invest in you and the opportunity you're presenting. They care about trust, credibility, and returns, not your letterhead. So let me be even more direct. You absolutely can start raising capital before you have an LLC before a website, before pitch deck. Alright, I've done it. My clients have done it. This all takes place way before you even have a deal to present. We've raised tens of millions of dollars in this exact formula that I'm about to lay out for you today. And guess what? Our investors didn't give a damn that we didn't have a shiny brochure upfront. What they cared about was what we can deliver. So I want you to erase that myth from your mind right now. By the way, even Tom Golisano, a self-made billionaire who started Paychex with just$3,000 preaches, keeping it lean and focusing on what matters. As Golisano says, that's part of being an entrepreneur. You watch your pennies when you're starting out. Don't blow those pennies on a fancy website or legal fees before you even have a deal or investor interest. Keep your money where it produces results and keep your energy where it produces results and putting in the work that everybody avoids doing. Coming up, I'm going to lay out the core methodology we use to get investors from knowing nothing about you to practically begging to fund your deals all before you even put a property under contract. This is the cold to warm, warm to hot investor roadmap, and it follows one golden rule. Ask for money when you don't need it. Now, this does not mean ask investors to wire money into your business checking account. That's not at all what I'm saying, but it's about reframing and changing your identity to your current sphere, and then strategically, intentionally expanding that sphere over time, which we're gonna detail that further on in this video. But let's talk about why timing is everything in raising capital. A lot of us are very, very tempted to start going out there, walking properties, analyzing deals, and making offers. And I would witness this. As a commercial real estate broker, I would list a lot of multifamily deals, and I listed 24 unit apartment complex. And I'd get calls from investors just like you, and within two seconds. Realized that they did not have a clue and it was not my job as a broker to educate them on all the preparatory things they needed to do leading up to that phone call to me. Alright, so we're gonna go into the early stage of this, and this is the reason why we are covering capital raising first before the deal because a deal can land in your lap tomorrow. But investors that know, like, and trust you and have you associated with the identity as a real estate investor and you're good at it, that takes time and intention and that's we're to cover today. So picture this, you just found a deal of a lifetime, a 50 unit apartment complex at a bargain price. You hustle, you get under contract, but then reality slaps you in the face. You need to raise a million dollars in the next 30 to 60 days, or that contract is gonna be toast. Suddenly you're in scramble mode. You're calling Uncle Bob. Begging old college buddies, speed networking on LinkedIn at 2:00 AM basically praying for a miracle. It's stressful, it's messy, and frankly, it's how a lot of rookie investors lose great deals. I do not want this to happen to you. The solution is to start raising capital before you have a deal on the line. In other words, ask for money when you don't need it. Banks love to lend money to you when you don't need it, right? Why talk to investors when you do not have a deal to pitch? It sounds like putting the cart before the horse again, right? But stick with me on this one. When you build relationships and secure investor interest ahead of time, you create a safety net of funding that's ready to deploy. When the right deal comes along, you're essentially lining up your capital before you need to pull the trigger. That way, when you do find a killer deal, you're not scrambling. A side note on this one is when you are scrambling, investors can smell it. It's like the same thing as commission breath. So planting that seed early on using this exact strategy is going to enable you to have the highest degree of success in raising capital for your first bigger deal and also subsequent deals after that. If you wait until your deal's closing, clock is ticking down, you come off as desperate, and desperate is capital repellent. Investors can smell it on you, and it doesn't inspire confidence. By cultivating trust over time, not by running to them at the last second, like a headless chicken spoiler alert, the money doesn't come magically. You have to go out and get it, and the best time to get it is before you're under the gun. If you've laid out the groundwork with investors early and built out that relationship infrastructure, then when you do find that great deal raising the money becomes way easier and more of a formality instead of a fire drill. So the takeaway here, do not wait. We're gonna talk about taking action today. The show has always been about what can you do today, this week, this month, to start taking action towards your goals. So start talking to potential investors now before you have a deal. This podcast is going to go into exactly how to do that step by step in a way that feels natural and not sleazy. By the time you're done, you'll know how to have people ready and eager to fund your deals. Such that when you say, I've got one who's in, you'll get swarms of I'm in instead of hearing crickets. So you're on board with starting early. The next logical question is how? How do you warm someone up from, I don't know, you cold to here's a hundred thousand dollars for your next deal hot. Great question. And that's exactly what we're breaking down next. In our context, a cold investor is someone who doesn't know you or trust you, yet a warm investor knows who you are and they're interested. A hot investor is ready to invest Now. Our goal is to move people through these stages methodically, and the key to do it is when you don't have an urgent need right now. Why? Because when you're not needy, you can play it cool. Provide value and build trust at every stage at the cold stage, the value might simply be a friendly conversation or sharing a bit of about what you do at the warm stage. The value escalates. Maybe you invite them to a meetup or share an investment insight or actually share a deal that doesn't work and they'll start seeing you as an authority figure on this subject matter of commercial income property. By the hot stage, the trust is built and the value is obvious. You have a track record and a clearly great opportunity and they feel confident that you'll be able to deliver. And here also a pro tip. Always ask for commitments or interest way before you ask for actual dollars. I'll explain what a soft commitment means later on in this training, but just know that investors typically go from interest, soft commitment to an actual investment. You don't jump straight from nice to meet you, to write me a check for a hundred thousand dollars. There's an art to gradually turning up the heat and that relationship and this is all very aligned with the mantra. Ask for money when you don't need it. And when you don't need it this second, you can take someone through these stages properly without rushing. It's like marinating a stake. You can't rush a good marinade, right? It just takes time and it takes intentional work putting into it. Now, before we get into the nitty gritty steps of how to actually warm someone up, there's another concept you must understand, and it's about why investors might prefer to give you their money instead of buying their own properties directly. This is crucial because it underpins the entire conversation you'll have with them, and it boils down to the four lovely tees. Let's decode that. All right, so the four T's are the tenants, trash, toilets, and most importantly time, if you own an income property, you are in the 6% of Americans that actually own one or more income properties across the entire United States, like you are a freak. So 94% of people out there would love to own an investment property, but it's the four Ts that hold them back and why you are in a very, very powerful position to be a subject matter expert, amongst your peers and community. ever talk to someone who could invest in real estate but doesn't want to be a landlord. They usually say things like, oh, I don't want to deal with the midnight calls about clogged toilets. Or I had a buddy who had a tenant that was a nightmare, and it was always having to evict non paying tenants, or simply, I don't have enough time for that hassle. So the four T's are your competitive advantage as to why you are a gateway or access point into having access to this thing called real estate, which everybody wants to own. And because you handle the four T's, they get to benefit from real estate without the actual horror stories. The passive investor does not want to get that 2:00 AM call, and if they invest with you, they won't. So you or your property manager deal with it. The investors just see the net results. And then lastly, time. This is the most overlooked and understated reason why aspiring investors don't actually buy a deal is because they just don't have the time amongst all of the commitments. They have their job, their kids, all of the, stuff that they volunteer for. This is your competitive advantage in you being the person that invested time into finding the properties, educating yourself and all that stuff. So the equation is simple. You are offering to trade your expertise and time to manage real estate. In exchange for their capital. They get the benefit of real estate ownership. Without the four T's, and that's a win-win value proposition that you should make your potential investors understand. When I'm out there actually meeting with potential investors, I'm always going in from the standpoint of, Hey, wouldn't you want to own investment property yourself? All right, this is everything I do to educate myself, find deals, fund them, all the, maintenance headaches that I have to deal with on a daily basis. Like, Hey, here's something that you can do yourself. A lot of times I'm actually able to convert investment partners just by being an educational resource for them so that once they actually realize everything that's involved with running a rental property business, they're like, damn, I just don't have the fortitude to deal with that, so please just take my money. One person that I absolutely look up to, that I take quotes from a lot is Nelson Leenhouts, who's co-founder of a company called Home Properties. That was a$7.6 billion real estate investment trust that was traded on Wall Street, the local to Rochester, New York, my hometown. He's always been a hero for me. And When I met with him a couple years ago, I asked him his secret sauce around raising capital. And this is a guy that created billions of dollars worth of value. And he started off his career in raising capital, at meeting people at their dining room tables, solicited them for checks for$15,000 a pop. So remember, things start small early on, but these relationships expand over time and you develop new relationships when you're strategically expanding your sphere. So later on in his investment career, raising capital wasn't that hard for him. He actually secured a investment partnership with Genesee Brewery when they had a lot of cash in their balance sheet and they could not, secure a return on investment by investing in their own equipment to expand the business. So they decided to allocate some of that capital to the Leenhouts' and they used that to grow home properties. So let's get into the step-by-step process of building your investor pipeline before you have a deal and warming folks from that cold to hot. And this is the meat of the episode, the process that's been proven over and over to raise capital on demand for your deals so step number one, start in your own backyard. One of, the guys I look up to, another, guest on the Go Big Live podcast. Matt Faircloth, author of Raising Private Capital Points Out. you are already standing on your own acres of diamonds. By that he means the people in your existing network, your friends, family, colleagues, neighbors, that rich uncle or your old boss, you grab coffee with. These are your initial acres of diamonds, a source of funding opportunities that are right under your nose. And another person that was a mentor of mine when I was hesitant in raising capital from friends and family stating that, Hey, I don't want to mix. Friends and family with business told me something that was absolutely riveting to me and it was this, if I can't do business with friends and family, who can I do business with? So you don't need to be born into a certain family or have a country club membership to connect with people who have money to invest. In other words, if you look around, if you go through your phone my phone here, I just looked at it the other day, has 2100 contacts in it. You'll likely know more potential investors than you actually realize. Now approaching friends and family can be tricky. You don't want to come off as salesy or put on any strain on those relationships. The key here is a low pressure informational approach. Do not start by asking them for money. Instead, start by simply sharing what you're up to in real estate, engaging their interest in the actual topic itself. This is part of the planting the seeds, when you're raising capital and building like a capital farm, you're dealing with basically feral, untapped land, so the first thing you need to do is start raking up that hard packed soil in order for that ground to be more receptive of a seed. This is the identity changing approach to your sphere. You may have been running your real estate business as a side hustle secretly that nobody else knows about. That's all gotta change right now. Everybody, you know that you have a relationship with. You have that KLT factor with a know, like, and trust, which is so hard to earn. It needs to know about what the next chapter is that you have in your life. And that is acquiring larger deals. So when you're catching up with'em at family gatherings or meeting friends at a restaurant for drinks a lot of times people are going to be interested in the subject of real estate investing. Everybody wants to be a real estate investor. Challenge me on that. I think that everybody does. I think maybe 1% of the population is crazy enough to not wanna have anything to do with real estate actively or passively. So just coming in from the standpoint of here's what I've been up to, here's what I'm actually gonna be doing next in the season of my business. And also coming at it from the standpoint of being evangelical about everybody doing it on their own. Like I said earlier, most people don't wanna do it because of the four T's, but if you can come at it from an approach that if somebody actually shows curiosity into what you're doing, it's just ask them like, Hey, why aren't you doing it on your own? It is your goal to buy an investment property this year and if so, I'd love to be able to take you out to coffee and show you exactly what I do and what's involved with the business, how to get started. Remember, 94% of the time, they are not going to use your free advice, for instance, to buy their first rental property. And this is where you come in now, something that, I do have clients that, come from rather humble backgrounds. And, they say, Matt, like, every in my family is absolutely broke as a joke, doesn't have two nickels to, rub together. They don't have a pot to piss in or a window to throw it out of. Still spread the word to your family. You never know that cousin that is perpetually down their luck. They may be best friends or college buddies with somebody that just sold their label making business for$30 million to a private equity company. It does not hurt for them to know what you're doing. So do not prejudge people in your sphere in this process at all. And a quick story, I had a client who was super hesitant to talk to his extended family about his real estate plans. So he assumed none of them were interested or had money. Finally, he casually mentioned it at a family barbecue, and lo and behold, his retired aunt said, you know, we've had some savings. And the bank is paying us a really low interest rate. I'm, further on in my retirement years. I don't want to gamble it in the stock market. Maybe we'd considered doing something like real estate or helping you out. That aunt ended up investing$50,000 in his next deal, and here's the other thing too, is that all of your ancestors have made tremendous sacrifices to put you where you are right now. And by not extending that opportunity and strengthening the family tree into future generations by empowering who's alive right now, that's a great disservice to future people that are in future generations in your family if you're going through this as like a credible, professional, you haven't lost your butt in real estate yet, okay? You're gonna be playing your cards right and being a good steward of people's money going forward. So why not extend the opportunity to friends and family? So part of the step is make a list of, let's say, 10 to 20 people you're close with who might invest or might connect you, with someone who could then start having conversations. There's no pitching or conversing. Remember, you don't have a deal yet. Your first goal is simple, to identify people who are open to learning more. And we'll call these people your warm prospects, starting out a step one no pressure just to awareness of what you're doing. And then, by the way, when you have these chats, listen more than you talk, ask questions. What do you think about real estate investing? Have you ever done it before? The more you get them to share, the more intel you have on how to approach them down the line. People appreciate you caring about their perspective rather than you rambling in monologue. So you started seeding this interest among people. You know, some folks express curiosity. Great, so now let's turn the temperature up a notch now with people in your immediate sphere. The one step that people really miss a lot of times you see friends and family in social settings, a lot of other people around. I prefer to take those many people approach a seat them many and then turn them into one-to-one. So I always like to book an appointment from an appointment or an appointment from an actual social setting so we can get one-on-one and actually get into the weeds on the discovery process with that potential investment partner or educational process that we talk about that we're gonna outline later on in the show. I love doing coffee or lunch. If you're younger then dinner and drinks could be one thing or a weekend meetup. But the vibe you want is gonna be informal, educational and no hard sell You're just reframing your identity to that person because you may be known by your entire sphere as, Bob, head of quality control with Procter and Gamble, and that needs to change, and that is what's involved with this process. I actually time block time on my calendar to actually reach out to people to set up these one-on-ones that are in my sphere. And this is what I do during the onboarding process with every single client that I bring into my advisory program. And it is, the mantra is this is fill your calendar. One thing is that if you do not fill your calendar with things and time blocking is very important, other things will occupy that time if you do not fill it yourself in with intention. So I actually set aside time per week, one hour to reach out to people in my sphere to set up my calendar for the month ahead on lunches, coffee dates, and the whole nine yards. And by setting an appointment with yourself, you're holding yourself accountable. And if your day goes sideways and you can't make that appointment with yourself, push the date, take your phone and like drag the date over to a time that's gonna be realistic, that you can actually make these reach outs to your, sphere of influence to set up these little coffee dates now in these identity changing meetings, we're gonna talk about a very, very powerful move, in a bit. And it's what I call audience segmentation and basically sorting out interested investors by what they want, right? Cash flow versus equity upside, short term versus long term. And why that can make or break your success in getting them to actually invest with your deal in the future. Because understanding investors psychology on returns is huge. If you've reached this point, give yourself a pat on the back, especially those, meetings with a few people that are in your sphere of influence. Most people never even talk to one potential investor, let alone get soft interest from a few. You're doing the work that others are too scared or too busy making an LLC logo to do. This is the real work that actually raises money. Not all investors are the same. Each person has their own goals, preferences and risk appetite. If you ignore this and present every investor with the same cookie cutter pitch, you're going to turn off some people unnecessarily. The solution is to segment your potential investors based upon what they value. And so when I'm actually in the educational process of, have you ever thought about investing in real estate and that sort of thing, the one question I ask, which is a really powerful discovery question, is, if you were to choose one thing, one thing only guaranteed cash flow. Or no guarantees, but upside. These are the two buckets or segments that I put investors in. You'll be surprised that 90% of the people that you ask this question to are going to prioritize cash flow and guaranteed cash flow at that rather than equity upside. And that's okay. What I do is I take guaranteed cash flow driven investors and put them in the bucket of private money lenders. They're perfect for private money lenders because these people, they want protection of their principle and they want a guaranteed income off of that investment. The other investor profile are the equity investors. These are the people that they want to double and triple their money over a five to seven year holding period. They may not be your investors in your first, let's say, five deals, because I truly believe that you can invest and my clients achieve this, is they're able to. Close their first 3, 4, 5 deals, five to$10 million worth of real estate holdings without having to give up any equity. And that's by guaranteeing a certain percentage of cash flow to investors later on, as you scale up into larger and larger deals and your balance sheet isn't able to keep up with the lenders and the banks that you work with, that finance those deals, you're gonna have to bring on equity partners to fill that void. And these are the kind of people, those people in the equity bucket, they're going to be important for that phase of your career. But by this point in time, you've been able to create a massive amount of cash flow and wealth for yourself, by partnering with cash flow oriented investors. And the other part that's important about the segmentation is because when you do have a live deal, you want to match the right deal to the right investor, or at least have the expectation as to how they're going to react, right? I do not write anybody off and pigeonhole anybody into a certain category. I always present to my entire sphere of influence with each and every deal or opportunity that we do have. And believe me, sometimes those equity investors are really, really intrigued by that guaranteed cash flow. So do not write them off, but just full disclosure, just having that expectation that those people may not be interested in, your deal that has a guaranteed 8% interest rate or something like that. And in tracking these meetings, as you set these up on your calendar, just create a simple spreadsheet with the person's name and just notes that you take, right in your car on a Google spreadsheet after that meeting these conversations sometimes turn into something that you're coming to them very indirectly and passively that they start driving the conversation towards specifics and actually start identifying how much they'd be looking to put into a potential real estate deal. So just taking these notes on a simple spreadsheet. You do not have to have a fancy, CRM or anything like that. Just a simple spreadsheet with the name of these people that you spoke to, and any additional notes on there that you can remember and recall when you are following up with them and nurturing that relationship. So by the end of step four, after filling your calendar and do these meetings, this may take you 30, 60, 90 days to do this depending upon how busy you are and how busy people are in your sphere. So by the end of this step, you are gonna have a list of warm potentials from your inner circle that are at least interested in hearing about a potential investment opportunity You have. Two, you'll have soft interest in pledges from some of them if they got to directing the conversation and being like, I do want to have exposure to real estate, and I'd love to hear about an opportunity you have, and this is how much I'd be willing to put into my first deal with you and an understanding of what each one wants so you're miles ahead of the average newbie investor who says, I have a great deal in a contract. Now what? With zero groundwork laid, zero relationship, infrastructure laid. And if you follow along, you can almost raise money. Now, even if a deal fell in your lap tomorrow, but we're not stopping there, let's crank it up and educate your investors further because an educated investor often is a committed investor. Now, I'm gonna back up a little bit. The reason why I've focused on changing your identity to your sphere of influence, for instance, is because you do not wanna be the person that has been running the real estate business in secret without anybody knowing about it. And then lo and behold, some random day you come up hitting up your family members because you have the smoking hot opportunity on the line, right? It is so antithesis to their understanding of you because they don't know what you do on a day-to-day basis, they don't know you as the identities of real estate investors. So when you start, presenting an opportunity to them, for instance, when you actually do have one on the line, they're gonna think like, man, cousin Matt, did he develop a drug problem or a gambling problem? Like you want to have this conversation, this identity shift way in advance and nurture that. And we're gonna actually go into like specifically how to nurture that to keep top of mind with this identity you create for yourself, so that you can have a much higher probability of converting those people that are in your warm network to actual committed investors. Okay, so step five, we're gonna go into educating your investors on funding sources. Alright, so this step is a bit of a secret weapon, I always go from the standpoint of, Hey, here's how you can do it yourself. And if they come up with the actual, objection that, Hey, I don't really think I have a lot of money to invest in real estate. I always go into like, oh, here are the creative ways that I fund my own deals, and how you can fund your own deals yourself because a lot of'em are gonna say, I really don't have a lot of spare cash laying around. Americans are not very good savers, okay? however they might have access to capital they don't even realize was there. So part of your job, if you wanna raise a lot of money, is to educate your prospective investors on different funding sources they can tap into. You'd be amazed at how many people have money that's sleeping in accounts or assets that could be put to work in your deals or deals of their own in the future, if they wanna do it on their own. So here are a few common sources to educate them on, and of course, only if it makes sense for their situation. We're not giving personalized financial advice, we're just informing them of their options of potential resources so number one is home equity line of credit. If you know someone who owns a home with significant equity, they can often get a line of credit against that equity. That money can be used to invest, for instance. If your deal yields higher returns than their HELOCs interest, then that's a win for them. Many folks simply never considered using their house money to invest in another asset. So you could open their eyes to this. I mean, this is exactly, and, and speaking from experience too, if you've done this before, talking about it through your lived experience of doing this or how easy it was to set up a heloc and remember, if they don't use it, then they don't pay any interest on it. But plenty of savvy investors do it to make their equity work harder for them. A personal anecdote is I had an investor who literally said, I love to invest, but I'm tapped out. And I asked the homeowner if they owned a home, and they said they did. And I asked if they ever considered a heloc. And their response was like, I have no idea what that is. So don't assume that just because you know that everybody you know knows. And a few months later, he opened up a HELOC and then several years later, they responded to an actual deal that we were raising capital for, and I said, Matt, thank you so much for educating me on this HELOC thing, and we're ready to put$50,000 into this deal. So, doing this stuff early on in the educational process, people can start to be inspired to take action from this. You do not want to be asking somebody to open up a HELOC when you are actually raising capital, right? This process starts very, very early on along all of these funding sources. The second form of capital is self-directed IRAs, right? This is a huge one. Millions of Americans have IRAs or 4 0 1 Ks from old jobs that are sitting in mutual funds because they think that's their only choice. That is completely false. Educate them on how they can actually roll those retirement funds into a self-directed IRA, which allows them to invest in real estate deals and a lot of other things as well. And in being in a taxed advantage account, there's a reason why I love. Self-directed IRA investors is because it is the quintessential form of patient capital. Remember, it's retirement funds, so they do not need the money now. It's gonna be money that they need access to 20, 30 years from now. So this is a great example of how I've been able to raise private money from investors that, interest payments deferred until we refinanced a property with a balloon payment at the end of that loan. And all these other different types of creative, structures that, was great for our deals from a cashflow perspective. And then secondly, self directed. IRA holders generally aren't interested in equity. They're interested in capital preservation and earning more income, for instance, which to grow their wealth consistently and safely rather than investing it into actual, equity real estate deals How I get into the actual educational process about this is that, hey, you know, you can actually use your self-directed irate to buy real estate. And also there is a, concept called Zombie 4 0 1 Ks. There's billions of dollars worth of 4 0 1 Ks that people have left with prior employers that are invested in mutual funds that are, not very advantageous. And a lot of people, especially these days are very skeptical of the stock market. So ask them like, Hey, listen when you left the CBA group five years ago, did you ever roll over your 401k into an IRA? And if so, you can actually roll over some, if not all of your IRA into a self-directed IRA and be able to invest in way more different types of asset classes, whether it's private credit, real estate, venture capital, every single one of those alternative asset types that may be more intriguing and more alignment with that investors' goals. It takes time to actually set up a self-directed IRA. So my homework for you is if you do have an IRA, you can convert let's say$10,000 of that IRA to a self-directed and put it into with an IRA custodian like equity trust, for instance, is who we use actually. And being able to speak about it through lived experience to that potential investor like, I did this, this is how you do it. It was really easy, is a way more powerful position than it being like, oh, this is something I just heard about on a podcast. Securities backed line of credit. Alright, so if someone owns stocks, non-retirement account types of stocks, a securities based backed line of credit is actually like a HELOC on a house. They can get a line of credit against their brokerage account without selling their stocks. Oftentimes, I ran into this actually when I was, trying to raise capital for a deal and a potential investment partner was like, listen, I'd love to invest, but I have a lot of capital gains that are tied up. I have a lot of Apple stock and that sort of thing, and I don't want to sell that trigger capital gains tax that's gonna be a significant expense for me to invest in your deal. This is where securities based line of credit can come into play and based upon the safety or volatility of that portfolio, some investors can actually get up to an 80%, loan to value on a securities back line of credit within which they can direct the proceeds of that line of credit to whatever they want to, whether it's into a real estate deal or private loans, for instance. Then the last one here is cash value life insurance loans. So some people, especially professionals, might have whole life insurance policies with cash value. That's money they can actually borrow from themselves. Insurance companies often allow you to take a loan against your policies cash value, often at a pretty low interest rate. You can use cash value life insurance to buy real estate by taking a loan on your policy. The investor continues to have their life insurance benefit intact while making an outside investment. It's a lesser known strategy, but can be very powerful. I've actually seen seasoned investors do this to fund deals exclusively. So now, why is educating on funding sources important to you? Alright, the two reasons is, one, it increases the pool of money available. Someone might have told you, I only have$30,000 in savings, but after learning, they realize, oh, I can tap an additional$70,000 from my IRA in terms of self, IRA, screw the stock market. I don't wanna do it anymore. Now they can invest more with you or have access to more capital within which to invest in with you, if not for your first deal, but your subsequent deals after that, your second, fourth, and fifth. Remember, this is a long game. Number two, it build your credibility as a knowledgeable investor and not just a salesperson. When you teach somebody how to unlock money for their own benefit, you've given them value without even asking for anything. And believe me, this is a point in time when you don't even have a deal, right? You're just educating them on ways that they could actually invest in real estate themselves, whether it's with you or on their own. So that goodwill is huge. You're effectively acting as a mini financial educator, again, with disclaimers that they should check with their advisors, attorneys, and CPAs before making any particular course of action. So by the end of step five, your warm investors should not only be eager, but also empowered because you've educated them financially and how they can do it themselves or with you or whatever. So now they have potential means to invest. And maybe even a little bit of excitement of like, Hey, I found money. I didn't know I had, you've basically helped them pave the way to say yes when the time comes, if the investment is appropriate for them. So you might be thinking, this is great, but my friends and family circle is only so big. What if I need more capital than they can provide?'cause you're gonna be running into this capital bottleneck throughout your entire career we do continually, as real estate investors that have been doing this for 19 years. So that is a fantastic question, and that's exactly what we're gonna cover next. So step six is expanding your network strategically and tactically with the right people. With people that are gonna be at the highest probability of being your best investors. As you grow this network, at some point you're going to get beyond your immediate circle to find more private investors. Maybe your deal volume is growing, which it usually does, or maybe your uncle's piggy bank has ran dry, for instance. but regardless, expanding your investor network is how you go from raising a few hundred thousand dollars to raising millions. There are several avenues to do this so the first one is just local meetups and clubs. Real estate investor meetups is a great place within which to build relationships with other investors. But when you're talking about sophisticated investors that are active operators, they're generally not going to be the highest probability of wanting to participate passively in an investment opportunity. They're active operators, right? So any other types of clubs or, special interests that you can get involved with? do not join a club or a special interest group if you're doing it from the sole standpoint of like, I want to raise capital for real estate deals. You're gonna come across as a sleaze and nobody is going to trust you when the time comes, no matter how smoking hot your real estate opportunity is. But if you're already, involved with a boat social club, just getting more involved with that club, volunteering for a board position, or on a special committee. When you are working side by side with people in your community towards a common goal, there's no better credibility builder than showing people how you work and your work ethic and all that good stuff. And then what I do is I build these relationships one-on-one using the exact same method as I did with my initial sphere is like getting one-on-one that belly to belly uninterrupted, FaceTime with those individuals just to make new friends. The other avenue for growing your sphere of influence is online communities and forums this is a thing that I love about LinkedIn and Facebook for instance, is their special interest groups. They may not be formal, non-profit, social or trade organizations, but they may be like Dads of Skokie, Illinois, for instance, right? So dads that report about like great places to take their kids, one way you might be able to add value to this group and meet new people and make new friends is by creating an event for Meetup, for instance, at, a certain time of the month at a playground or a predetermined place, in advance. So you can actually, utilize those things to grow your network regardless of where you are in the country. Next one is referrals. This is huge. Your current warm contacts can lead you to others. So maybe your friend isn't liquid enough to invest, but their boss has money and is looking for opportunities, they can introduce you. So I always, when I ask them this question about, if I had an opportunity that I really liked a lot, would you be interested in learning out how you could participate? And if they say, I don't know. Or even if they say, yeah, of course, I'd love to hear about it, which 99% of people do anyways, even if they don't have the intention of doing so, then I always ask them a follow up. Who else do you know who might be interested in coming along for the ride with us? Okay. And sometimes, just by asking this open-ended question, who do you know rather than, do you know anybody else? Which is a yes or no question, kind of tricks the brain into thinking like, oh, well, you know, going back to the example like, oh, well my, you know, college buddies, just sold their, Label making business for$30 million for a private equity company, so always asking for those referrals because a warm connection to somebody through somebody, you know, this is what builds consensus and what I call social blockchain and consensus. Human consensus is what has made up the entire fabric of human civilization, right? Consensus has been able to accomplish great things in terms of technologies and, monuments and, wonders across the world or started terrible things like war, So this is how you can actually really leverage your, relationships and get introduced to other people that are outside of your sphere through people that are in your sphere. Now, expanding your network does not mean abandoning the principles we discussed. you still take people from cold to warm and warm to hot, just maybe at an accelerated pace or with slight tweaks. You might meet somebody at a networking event that might be a cold connection, have coffee with'em next week turning it to warm and then getting a soft commitment or hot on a deal that you end up, raising capital for the future. The process is the same. You're just adding more people to the funnel's top. for instance, one of my clients met a dentist at a neighborhood party they got talking about side investments. He followed up for lunch, shared what he was doing. That dentist ended up introducing him to two other dentists in his circle, and collectively these three have invested close to a half a million dollars with my client over multiple deals. None of that would've happened if he hadn't been open about his real estate work and followed up. And dentists, doctors, professionals, successful people often have capital, but very little time. Remember those four T's, they make great passive investors if you just connect with them. All right, now we've covered all of the low tech, high touch, old fashioned belly to belly relationship building. All right, now we're gonna talk about how to augment and supercharge your ability to build relationships at scale and at light speed. And that tool cannot be ignored, and that is social media. And I'm gonna go into exactly how to view this and use this as a tool to smartly amplify all these efforts. So social media is a double-edged sword. On one hand, you have gurus dancing on TikTok promising real estate riches, right? On the other hand, you have genuine investors sharing valuable insights and building huge networks via LinkedIn, Facebook, YouTube, et cetera. We're going to do this strategically. The goal of using social media here is twofold, credibility and visibility. One guy that I look up to, Paul Singh, for instance, a serial venture capitalist, I went to a meetup of his and he said one thing that absolutely stuck with me, and it was this day and age, notability is more important than credibility. It is sad but true, but this is how to use social media to build that notability and credibility amongst your sphere and keep them indoctrinated with the idea that you're in real estate and that you're good at it. So in this section of the training, I'm not gonna go into the nitty gritty on. All this stuff you need to know about how to leverage social media to build your capacity as a capital raiser. Definitely check out my YouTube video, the 15 commandments of social media and raising capital. But here is some high level insights on what has worked for me and what I do with my actual social media programming and how it allows me to be a much more effective capital raiser in the process. So here's some practical ways to do this. People are very voyeuristic about. Real estate, remember, 94% of people don't invest in real estate, have never done it, but only dream of doing it. So they're gonna normally be very, very curious about people that are out there that are in their sphere that are actually active real estate investors. So out there, just sharing your journey and wins, right? So did you just tour a property, for instance? snap a photo if it's nothing confidential and write a short post about what you're looking for, right? you spent the afternoon analyzing a 50 unit apartment building and you're excited about the possibilities so we're running the numbers to see. If it hits our investment criteria, did your existing investment property hit a milestone? if you close your refinance or even you leased up a new, apartment at, you broke a record in terms of, rent comps for the area, I love to use ChatGPT as a tool to ideate around all of this stuff here. And I can just ask it, like, give me 100 content ideas, about, educating real estate investors or, content that can either inspire, educate, or entertain, for instance. Okay? So that's about sharing your journey. So these posts do a few things. They suddenly tell people I'm doing deals. Okay? That's the credibility, right? And they show progress. Even small wins count, and they keep you visible in the feeds. I love the algorithm because with Facebook, LinkedIn, Instagram is that if people aren't interested in your stuff, then they won't see it. Only people that actually stop their scrolling and seeing what you're up to will actually do it. So you're actually curating an audience, and this it is far less annoying than putting somebody on an email subscription everybody's sick of their inbox being filled up so this is a very, very curated way of doing that and keeping you top of mind. So I just touched on this briefly. Educate, inspire, or entertain. Alright. Those are the three things. If it does not do one of those three things, then it does not belong on your feed. You are not raising capital through social media. All you're trying to do is create value and position yourself as an actual subject matter expert. And when you're seen as someone who gives. Useful information, folks pay attention, I've had people follow me silently for years and then DM me, Hey, I'm seeing your post. I'd love to actually take you out for coffee and pick your brain. I always take these, brain picking appointments because these people can actually be potential investors or introduce me to potential investors as well. Now my next point is I get this question a lot. which platform do I post on, I only have a certain amount of time in the day and, what do I do on LinkedIn, Instagram, Facebook, and my answer is simple. Wherever you have the most amount of connections is where you should be focusing on creating content and posting. You do not need to create all these different social media accounts and, maintain five different ones at once. You can lean in on really, really focusing on building your network and educating and providing value to that with one of those platforms. Myself, I am so bought into social media because remember I found an investor on LinkedIn that invested$50,000 in my first deal, this was probably about six or seven years ago, and just a couple years ago, fast Forward wrote us a check for a million and a half dollars. So these things do take time to take attention, but it was my consistency in posting valuable content out there that kept me top of mind and kept that relationship very, very strong. So that when we met each other face to face or we had a phone call, it was like we just picked up where we left off. Now setting goals in terms of posting on social media, it's gonna be something that if you've never done it before, it's gonna be very uncomfortable. And just remember what got you here is not gonna get you there. So setting a habit of it, that's very achievable, but also significant. So if you've never posted anything before, then just commit to posting one piece of content a week. When you start exercising that content muscle, then you start looking at the world in a different way, and you start getting inspired all the time. I have a notes app on my phone that literally has thousands of content ideas that I haven't even tapped into yet. So that's how I'm able to actually post seven days a week on this. Like I never run out of ideas, but when I first started out, I was like. I don't know what to do, right? Like I don't even know what to talk about. So that's why I use it. ChatGPT like I said, early on as a way to ideate. I don't have it come up with the actual content itself. I just have help me come up with ideas for it and I'll review those 100 ideas and I'll pick like, let's say five of them that seem interesting. So here's the thing, consistency is going to be key. If you go dark for six months and suddenly pop up only when you need money, people notice that. So stay present. But as I said, don't constantly hard sell or don't even hard sell at all. The point is to be on their minds so that when you do reach out and they have money to deploy, for instance, you are top of mind and you already have that trust factor built in and that subject matter expertise. So I had been posting consistently for five or six years, and this is a story that should make you. Bought into using social media as a tool, right? First of all, social media's only use is to make you money. And my little mission out there is that of all the nonsense that's posted out there, of all the things that people have no control over, that, are just like silly rants, misinformation, disinformation. I'm just like, Hey, if I could put a little bit of positivity out there that might inspire, educate, or entertain somebody in a way that's going to productive, I will do that. But this one story actually made me committed to doing this every single day. And this was back about, six or seven years ago I was on, I was walking on the canal with my wife and I had some guy yell out to me and I was like, Hey, Matt, hey Matt. Hey Matt. It's Nate here. And so I turned around. I barely recognized this guy, I haven't even thought about this guy in 10 years, And he never liked, commented, shared any of my posts or content or whatever, anything like that. And he was like, Hey man, keep it up. I'm getting so much value outta your content. Oh, by the way, like, let's get together like over coffee sometime soon and talk about real estate, so this is that one moment in time where I was like, okay, the one-to-one thing is definitely where the magic happens. But, you know, having that broad net and broad exposure, it allows you to, develop and build relationships and maintain those relationships with ease by casting a wide net and going on a one to many basis. And, ever since that, being in the presence of that guy that I hadn't even thought about, occupying no mental real estate in my mind for 10 years, it was where I was like, I need to do more of this and I need to do it consistently. So you might say to yourself, I'm not a social media person, do you wanna raise money or not? if your investors are hanging out on this thing for hours a day, right? You're missing out on an incredible opportunity to actually build that relationship and here's the best part. It's free marketing I run marketing for my business. It's incredibly expensive. Organic social media is really a highly effective way on building your network and keeping it nurtured over time. So definitely be sure to check out the 15 Commandments video that I put in that goes into this more detail from a tactical standpoint and using social media as a tool. but if you implement step seven, you'll create a virtuous cycle. The more you post, the more your network grows. The more your network grows, the more potential investors come into your ecosystem. And the more deals you do, the more success stories you can post. People who were cold contacts become warm just by silently observing you online. By the time you actually talk to them, they'll feel like they know you and already trust your expertise. This phenomenon is real. I've had meetings where someone quotes my own post back to me and has basically sold before I even present an opportunity to them. So we've covered a ton of ground here. From mindset to prepping investors to specific steps to expanding beyond your inner circle. So let's bring it home with a bit of recap and some final wisdom. So we've been through a full journey together in this episode. So let's do a quick, high level recap of the step-by-step process for raising private capital for commercial deals. Number one, the myth busting In mindset. We've killed the false belief that you need an LLC website or pitch check before raising money. You don't focus on relationships, not resumes. Two, start early way before the deal. Embrace, ask for money when you don't need it. Start talking to potential investors now, not when your back's against the wall like I have in the past. Remember, it took years off my life and it was an incredible scramble in the process. Three, understand the investor warming process. Do not rush it. Turn strangers into casual contacts. Contacts into interested prospects and prospects into committed investors. It's a court ship, not a one night stand. So the four T's value proposition, right? So the tenants trash toilets and time, these scare most people away from direct real estate investing. So that's your in. You handle those, they get passive income. You're not asking for a favor, you're offering a service and a damn good one at that. Investors give you money because it makes their life easier and wealthier. Five awareness building with the inner circle, your friends and family and professional contacts the people that have that KLT factor with you, the, acres of diamonds that you're standing in. Those are probably going to be your first investors, or at least your investors in your first and second deal, for instance. Okay? So just reaching out to them and making them aware of what you're doing and then keeping them informed of your journey along the way is going to be incredibly impactful in allowing you to raise the capital for your first couple deals, because I'll guarantee you, you are not gonna raise capital for your first deal from some killer app on the internet. Not some crowdfunding website. I've never raised capital. Neither have any of my clients, nor the dozens of guests that I've had on my show. It starts with a relationship somewhere. Number six, the low pressure meetings. All right? This is where you're planting those soft seeds. You meet one-on-one to build the relationship, to feed the curiosity, educate and build rapport. there's no hard selling, just storytelling, answering questions and being a known as a go-to resource on this subject matter of income property. Step seven, the soft interest ask, if we found a deal that we really liked a lot, would you be interested in hearing about it? Very, very passive and indirect, right? I. Hear about it. Okay. Like of course I'd love to hear about it. This is the process of asking for permission to present an opportunity. That's it. this is consent culture, right? So you don't want to, be in a position of not doing any of this work and then, cold calling somebody, or even warm calling somebody that's in your network with something that's completely outta the blue. this process of asking this specific question, if we found a deal we really liked a lot, would you like to hear about how you might be able to participate in it so if they say yes, that's a soft commitment. Now you have a sense of potentially how many people are on deck and ready to go. At least be receptive to an actual opportunity to possibly invest in your deal. Eight. Segmenting investors you took note of who prefers what, right? Cash flow or growth. Short term versus long term. Any of the other things that could be disclosed as potential concerns. For instance, now you can tailor your future deal presentation to each investor's goals. so you know your audience. Nine, educating and funding sources. You became that valuable friend who enlighten them on HELOCs, self-directed IRAs, securities back line of credit, life insurance and more. For many, this was a game changer. You effectively made the pie bigger, increasing both their opportunity and yours, and you boosted your expert credibility in the process. 10, expanding your network. You didn't stop at your cousins or college buddies. You hit the meetups, networking events, the online forums. You shook a virtual on actual hands. You asked for referrals, got introductions. Met friends of friends who have capital. Each new contact. Got the same royal treatments from steps one through nine, your funnel widened, bringing in fresh capital and perspectives. and then step 11, the social media amplification so finally, you cranked up your visibility, change your identity with your sphere of influence are strategically expanding your sphere of influence with the people that are gonna be potential capital partners. And you started posting about your journey, sharing your knowledge, creating that value, and also sharing your milestones and wins along the way. And even losses. I document my losses and I get a ton of engagement on that. And it shows me as a, as a fallible individual that makes mistakes and, burns money as a result of it. So now even people who you haven't met feel like they know you and trust your competency in the subject matter, you became the real estate person in many folks' minds. Remember, you are part of the 6% club. So 94% of people, they don't have a real estate person that's this close in their network. So when you message someone or someone refers a friend to check you out, your Facebook, LinkedIn, Instagram is basically a highlight reel proving this person knows their stuff and that is incredibly powerful. So now what happens when you do all this? Well, when you do have a real deal to fund, you don't panic. You have a meeting or send an email to your warm list explaining the opportunity. By the way, if you want to know exactly my framework and process for this, check out the 16 steps to closing an actual real estate deal. This is where I cover that in the actual sequencing in it of investor communications, so if you've done everything right, a good chunk of those soft commits turn into hard commits. Suddenly raising that$500,000 or a million dollars isn't so daunting. You might even find it oversubscribed. Most of my clients have oversubscribed deals because they followed this exact process to a t and spent the first part of their journey with me on building out their OPM infrastructure. And by doing all this and creating an abundance of relationships with potential investment partners, if you have somebody that backs out or hesitates, you have backups and newcomers that are in the wings. Before we close, I wanna underscore something. Integrity and follow through. All the strategy in the world won't save you if you screw over your investors or fail to communicate when things go wrong. Always treat that money like it's your grandmother's life savings. This is a very sacred thing and a very big, burden to bear with real estate operators because we are partnering with people's money. But those people's money, that was their time that they sank into. And if you lose that money, then they're losing a portion of their life or they're losing their kids' college education they saved up for, or they're not gonna be able to retire at the time that they want to. this is very, very serious business and you want to treat people's OPM as better than it's your own. And if you have an immense amount of respect for this capital, then you perform for investors and you under promise and overdeliver every time, this is how this thing grows like wildfire and how we're actually able to get referrals from other investors in deals that we've subsequently done in the future is by being a good steward of people's capital. And then here's the one question you're gonna want to have memorized in your pursuit of soft commitments or planting those soft seeds to your sphere of influence and ever-growing sphere of influence as we laid out. And that's this. If I found a deal that we really liked a lot, would you want to hear about it? Okay. That is the one thing I want you to remember outta this whole thing. It is not sleazy. It changes the identity, and it opens up that door and consent to then presenting an opportunity in the future. So use it often when you're meeting people and talking about real estate. Now you have the foundation of what it takes to start raising capital or position yourself to raise capital. So you've got the knowledge now. So don't just listen to this and do nothing. Go out and implement. The steps are very clear here that I've laid out. Will it require effort and stepping outside of your comfort zone? Hell yes. You might have to call that friend you haven't spoken to in a year or speak at a local meetup when public speaking isn't your thing, or post on LinkedIn when you normally just lurk. But do you wanna raise capital or not? Do you want to build that commercial real estate empire or not? If the answer is yes, you have to take consistent, violent, imperfect action, and no one is going to do that for you. But now you know how to. Raising private capital is truly a superpower in real estate. A lot of times you go to real estate investor meetups and it's like the people that got deals got off market deals are the rock stars in commercial real estate. It's the people that have relationships with investors that are the rock stars of this industry. And it's the art of making money appear when a deal calls for it, not by magic, but by method. And right now you have that method in your hand. So get out there and make it happen. Start those conversations, build those relationships. Become the solution for investors who don't even know yet how much they need you. And above all, ask for the money before you need the money. you'll be amazed at how doors open when you're prepared and patient. So thank you for hanging out with me through this episode. I hope you got a ton of value out of it. And if you did, please subscribe to our channel. I only drop no fluff educational content as it pertains to commercial income property. Share with your friends comment. This tricks the algorithm into getting this content distributed out there to more people. Next week, we're actually gonna go into the deal flow part of the bottleneck. So we're gonna go into my tactical method and how to get off market deal flow specifically in a step-by-step process just like this one. So make sure to stay subscribed and check out the next episode next week, Stay well. See you next time.