Syndication, chicken or the egg?

[Chris Robertson]

I've read a ton of material in just the last few days about raising capital, underwriting deals, and the power of apartment building investing! I find it compelling but It brings up a question in my mind though that I am not sure how to wrap my head around. Like the age of old question of what comes first, the chicken or the egg; I find myself wondering how do you secure a property under contract without capital when you need the contract to raise the capital?? I'm looking at it through this lens, I've recently started a second career as a real estate agent, and when my clients present purchase offers, we need to include a pre approval or proof of funds. Or my clients would need to deposit their earnest money within 72hrs, but I'm using OPM…. So where's that money sourced? Any advice as the the order of operations when talking to banks and investors would be helpful! What would be the CRE version of a pre-approval letter and what would I need to show a bank to be taken seriously?

Cheers!

[Anthony Chara]

The short answer is Yes. You should always be looking for deals and you should always looking for money.

If you don't have the necessary Capital to show PoF's yourself, then you should look for a person that's willing to allow you to use an account statement to help you get over that hurdle with the seller or seller's agent. Even though you use their statement, that doesn't mean they are committing to invest or partner with you on the project. Make sure they know that. Once you have the contract secured you can figure out how the deal will fit together, who you need, how much money you need to raise, etc. That person can decide at that time if they want to partner with you and actually invest their funds in your deal. Whether they do or not, you may still have to raise more money. Network with everyone you come in contact with. Let them know you're an apartment investor and ask them if they'd like to hear more when you find a deal. If they say yes, get their contact info. Go to as many RE club meetings in your area as you can, go to Cash Flow 101 game events, go to any type of RE event in your area to begin the process. There are 2 clubs in your area you should check out. Mid-Atlantic Real Estate Investors Association (MAREIA) and Baltimore REIA.

Another way to get in the game would be to partner/invest in someone else's deal and learn from them. This will add to your own 'experience' level when you do find your own deal.

Lastly, get training. Reading lots of blogs is one thing, but its no substitute for actual training and then actually being a part of a live deal.