Raising Capital from Accredited Investors

[Ashley Wilson]

Hi BP Community! I am partners in a local Philadelphia group that has an apartment deal in Houston, Texas, and is currently in the capital raising stage.  While I have a network of accredited investors that I am speaking to currently, many of them have never invested in real estate before.  I am wondering what is the best way to convert them from interested to invested?  This is the best deal that I have vetted to date; however, when I go over the details with people, most think that it is too good to be true.  

[Ashley Wilson]

Hi Gregory:

While I appreciate your input, if you reread my question I was looking for help converting my network, not for you to belittle my experience.  This is my first time stepping up to a small part in a GP, from previously being a LP.  The BP community has always been a place for people to gain support from others, because everyone starts with their first deal, even Blackstone.  

That being said, here are my responses:

1.  These types of deals have a whole team of people involved in the process.  Anyone who has invested in large syndications previously, which it seems like you have, knows that generally the GP team is comprised of very experienced professionals, which this situation is no different.   If you look back to my initial question, it concerns converting my personal network of accredited investors with no real estate investing experience.  From my over ten years of fundraising for non-profits, and private institutions for multiple organizations and for multi-million dollar funds, the number one reason people convert to donating is based on the relationship you establish.  From everything I have read/listened to on raising funds for syndication, a pre-established relationship seems to be the most important component to getting one to invest.  And while I agree that speaking with an experienced syndicator is also a valuable component, many syndicators outsource the fundraising.

2.  Yes, the majority of their experience is in large complexes.

3. They have experience in Texas already, and they have partnered with one of the largest PM groups in the area.

4. Cap rate from T12 is 6.8. This was an off-market deal, brought to our group by a broker.

If you want to have a more in-depth conversation please pm me.