I started working with a mentor to learn multi-family value add investing in early 2016. I devoured books, focused on learning the terminology and how to run the numbers on deals. I focused on finding multifamily deals in the state of Texas to underwrite and I was underwriting at least a deal per day and sometimes 2-3. I met with my mentor twice a week for an hour to review my progress & understanding of property analysis. I learned a lot in a short amount of time and pressed myself to consistently spend time each day working on my business and underwriting deals. My knowledge and understanding of the business was growing and I felt like I was making really good progress and then everything changed... (in a good way)

My wife and I had a baby boy in mid July and with a young boy we had made plans to move back to Austin after 3 years working in San Francisco. A week after my son was born, my mentor asked if I wanted to participate on the general partner side of his 296 unit multifamily deal. I answered with an emphatic yes! He followed up my "yes" with a rebuttal - "You have 6 weeks to raise your share, Are you sure you want to do this with a newborn and a cross country move coming up at the 1st of September?" 6 weeks to move & 6 weeks to raise the money, no problem. Again, I answered with an emphatic yes! (with the help of my very supportive wife). And so began my journey to raising capital for a large multifamily investment.

I started with a blank excel workbook and made a list of family, friends, business associates, alumni from college, and acquaintances who I thought had the ability to invest a minimum of $50,000. I came up with a 163 people in my network who would be my initial list of investors to offer this investment opportunity. What followed was a flurry of cold calls, emails, Facebook messages, meetings for coffee, LinkedIn Messages and lunches.

What did I learn?

1. I identified three different categories of investors - (1) Investors with no capital or desire to invest in multifamily/real estate (2) Working professionals (doctors, lawyers, techies) with an appetite to invest and working capital but do not have real estate expertise (3) Deal makers/Investors who want control - Either those who are actively putting deals together and operate in the general partnership or investors who want control and active management of the day to day decisions regarding the asset and investment strategy.

Working professionals were my best candidates to invest in our deal and comprised 100% of my investor base.

2. It is critical to build expertise and a brand to attract new investors and you must build a pipeline to always be attracting new investors. Prospecting for investors in my network required a 4 part conversation - (1) catching up with contacts who I have not spoken to in a while or with friends who I visit with frequently (2) Explaining what and who I was working with and what we were doing from an investment approach (3) Presenting the actual deal that was set to close in 6 weeks (4) Qualifying the prospects to determine the desire to invest, capability to invest and ability to execute in a short time frame. - Sometimes I would only have 30 minutes with the investor to cover all four areas effectively without rushing them through any of the conversation topics. Not an easy task.

Building a brand and a track record that enables you to spend the most time focused on step 4 is critical to scaling your business and growing your investor base outside of your personal network very quickly.

3. Not asking for commitments can be a crushing blow to your ability to raise capital. Do you have to ask for a commitment from the investor to invest after your first call? No. Can you ask for a commitment on your first call? Yes! The biggest mistake is to qualify your investor, deliver a knockout pitch and then let the investor "think about it" without determining a date & time to discuss the opportunity again. Once your investor has your pitch deck and heard your presentation, there is a good chance that you will be chasing your investor for an answer. And there is an equally good chance that you won't hear from the investor again until after you have already closed or missed the closing of your deal. I would have saved a tremendous amount of time asking my investors to agree to next steps on the 1st call. I spent a good deal of time chasing investors.

(1) Qualify the investor, present your opportunity, determine questions/or FUD (fear, uncertainty and doubt), Ask for next steps and agree on a date & time to follow up to address questions/FUD & get commitment.

What happened next?

We funded the project and closed on the property the 3rd week of September. All told, $6M dollars was raised by myself and the general partnership in the span of 6 weeks. I am continuing to build my investor network by hosting meetups & BBQ's in Austin, working with my network to develop referrals and building an online brand with a website, newsletter and podcast to follow. I expect to have identified the next deal in the next 30-60 days and will be hustling to raise another round of capital to fund our Q4 project.

Raising Capital for a 296 Unit MF: What did I learn?

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