Having challenges raising capital during COVID for active deals?

[Jonathan Barr]

Hi BP community,

I wanted to share my experience working on funding my first larger syndication 71 unit apartment deal.  I had about almost 3 times the amount needed in verbal commitments.   When push came to shove more then 80% didn't perform. Many of it due to covid job/business affects and psychologically. I do already own an apartment building so was hoping that would give the track record needed.   The good thing is my partner and I have funds to make up the difference.  It was a wake up call to expand our network of investors.   So we will be working creating our own platform to open up our funnel. So Next time around are able to fund it no problem.

I just bring this up for any newer syndicators during this time. You will probably need to get 4-5 times soft commitments then you may need.   Obviously helpful if you have some of your capital as well.  I know some people out there haven't had any issues raising capital.   That seems true for those operators that have quite a long successful track record. Is anyone else out there experiencing something similar? 

Thanks,

Jonathan Barr

JB2investments.com

[Greg Dickerson]

Originally posted by @Jonathan Barr:

Hi BP community,

I wanted to share my experience working on funding my first larger syndication 71 unit apartment deal.  I had about almost 3 times the amount needed in verbal commitments.   When push came to shove more then 80% didn't perform. Many of it due to covid job/business affects and psychologically. I do already own an apartment building so was hoping that would give the track record needed.   The good thing is my partner and I have funds to make up the difference.  It was a wake up call to expand our network of investors.   So we will be working creating our own platform to open up our funnel. So Next time around are able to fund it no problem.

I just bring this up for any newer syndicators during this time. You will probably need to get 4-5 times soft commitments then you may need.   Obviously helpful if you have some of your capital as well.  I know some people out there haven't had any issues raising capital.   That seems true for those operators that have quite a long successful track record. Is anyone else out there experiencing something similar? 

Thanks,

Jonathan Barr

JB2investments.com

Raising capital is something that requires systems, consistency and focus. You need to make sure potential investors are thoroughly vetted and verified and added to your system with all appropriate documentation including the amount they are ready to invest right now. This will help cut down on soft verbal commitments backing out.