How an Investor Raised Over $1MM for 1st Two RE Syndication Deals

If you were brand new to the real estate syndication niche, it is unlikely that you would be able to raise over $1 million for your first deal. It would be even more unlikely that you would be able to raise over $1 million for both of your first two deals. However, Dave Thompson was able to accomplish this improbable feat. In our recent conversation, he explained how he was able to do so through his natural networks.

There are three main natural networks that Dave leveraged to raise over $1 million for his first two deals:

1. Personal Network

Dave’s personal network includes family, friends, and work colleagues. These are the individuals that already knew him and knew about his real estate background. Fortunately, Dave already had real estate experience – over 5 years purchasing single-family residents. Therefore, his personal network already perceived Dave as a successful investor.

Within this network, the two main money raising avenues were his wife’s network and a past business associate:

• His wife’s network was a natural path because she knew many people that were already interested in real estate and had cash readily available. Also, she had already built trusting relationships with these individuals. This really got Dave going in the right direction.
• The past business associate is someone that he used to work with in the high-tech sector. He is Dave’s biggest contributor.

If you have been or are currently involved the high-tech, legal, or medical industry, this is a gold mine for raising money. Many of those people are making pretty good incomes. They don’t have the time to be active in real estate investing. However, they are savvy enough to understand that RE is an important aspect of investing.

2. BiggerPockets

BiggerPockets was another network that Dave leveraged to raise money. Social media outlets, like BiggerPockets, that focus on real estate education tend to attract investors who are actively looking for opportunities. While Dave couldn’t specifically advertise his deals, he was able to portray the same message by posting valuable content and creating a strong bio page. As a result, whenever he posted something to the forums, investors that view his profile would know that he is a real estate syndicator that raises money for his deals.

3. Local Multifamily Meet-ups

The third network that Dave leveraged to raise money were local multifamily meet-ups. He thought that he would do better here than he actually did. It seemed as if this would be an event that would naturally attract investors. However, he found that many of these people wanted to be active in real estate. Also, many of them weren’t accredited investors.

Deal #1 Money Raising Breakdown

For Dave’s first deal, he had 13 total investors. In regards to the percentage of dollars raised from each of the three main networks:

• Personal Network = 70%
  • Wife’s network = 35%
  • One past business associate = 35%
• BiggerPockets = 25%
• Local Multifamily Meet-ups = 5%

What Dave found interesting was that the number of investors from his wife’s network and BiggerPockets were about the same. However, the amount invested differed. Dave believes this difference can be attributed to the existing level of trust he had with his wife’s network. Since BiggerPockets is online, those investors didn’t know as much about Dave and his background – aside from the information in his posts and bio. As a result, they would typically invest less on average.

Another interesting point: Dave didn’t have much success with referrals. He asked for a few but didn’t feel confident enough to ask for too many since it was his first deal. However, he believes that referrals and repeat investors will be a larger part of the money raising pie moving forward. This was experienced first-hand when he raised money for his second deal…

Deal #2 Money Raising Breakdown

For Dave’s second deal, he had 15 total investors. Of the original 13 investors from the first deal, 5 were repeat investors for the second deal. In regards to the percentage of dollars raised from each of the three main networks: his wife’s network, the one business associate, and BiggerPockets accounted for over 90%.

As you can see, for Dave’s first deal, 70% of the money raised came from 2 networks. For the second deal, over 90% came from 3 networks. Therefore, Dave recommends that you focus the majority of your efforts on the natural paths that result in the largest percentage of money raised. Spend a much lower amount of your time focusing on the remaining 10%-30% that come from many other misc. sources.