All Forum Posts by: Joel Block

These are the kinds of discussions that I find very dangerous on this board. Some of the people contributing know what they are talking about but the issue with professional services is that you need to know all of the facts before an opinion can be provided. Certainly, facts have been omitted - even by accident since a proper interview has not taken place. Be careful if you follow this advice. At a minimum, speak to someone you trust on these topics personally before moving forward.

I second that...

Bryan, the student has become the teacher. You have addressed Adam's questions very well. These are complex questions with answers subject to variation. A forum such as this one is not the best place to understand the details of deal structure. You have been given a good, basic summary. Adam, feel free to reach out for more info on the particulars.

This thread is not exactly providing your will great advice. Putting your materials together in an accurate and professional manner is very difficult and takes tremendous experience and skill. Do not believe for a second that you can do it on a Saturday afternoon. Even if you could put part of it together by yourself, you still need a skilled securities attorney to put the deal together. Do not forget, that everything you show investors, including your Saturday afternoon marketing material is part of your offering which needs to be approved by the attorney.

If you hire the consultants to help you, they can only do a fraction of the job. The attorney has to do the heavy lifting.

The bigger issue is about capital raising. Most offers to raise capital are fake. You pay $9k and they can't do the rest. Remember the capital raisers are selling you - not a building. How sellable are you? Are you an experienced steward of other peoples' money? They will probably fail in the capital raising and they will blame you for being too inexperienced in stewardship matters. So even though 10% is a realistic price, don't worry because you won't be paying it.

There are no shortcuts in this business. Put together a great plan which is wrapped in great legal materials. Cultivate relationships with investors who appreciate and respect what you bring to the table. That's the formula. Take a shortcut and you might as well throw away the money.

Sometimes you have to do what you have to do, but this one is not a good idea. Taking a bridge on your equity with the hope that you will be able to continue raising capital and pay it down puts both you and the investors at risk. I have seen guys close without enough capital - using their acquisition fee as the bridge (i.e. not taking the fee now and assuming that they will raise the money and take the fee later). Somehow, the money doesn't com in as planned. The excitement of the deal fades, the promoter moves onto the next deal and future investors sense your desperation - leading the sharp ones to ask for a bigger cut - or worse, part of your promoter share. I hope these insights help. JGB

Did you ever move forward with any of these deals? We would still like to talk to you and catch up. JGB :idea:

In all of sales, the money is made when you buy. If you buy right, anyone can sell it for a profit, but if you overpay, it will be hard to sell. Focus on your acquisition skills and buyers will flock to you - and your margins will be larger.

The other problem with buyers (and lists) is that they can waste a lot of time. Be known for your buying skills and people will beg you to call them with deals.

Warren Buffet's Advice Addresses this Issue:

A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful. And most certainly, fear is now widespread, gripping even seasoned investors. In waiting for the comfort of good news, they are ignoring Wayne Gretzky's advice: “I skate to where the puck is going to be, not to where it has been.”

-- Warren E. Buffett, The New York Times, 10/16/08

If someone brings us a deal, what is a reasonable commission that we should expect to pay in today's market? We recognize that some finders do a lot of work and package the deal so that it is ready to go while others do little more than provide a phone number so that we can do it ourselves. But on average, is there a consensus?

I was just invited to this one:

http://www.meetup.com/FIBI-RealEstateVenturaCounty/

If people on BP want to set a meeting in the Los Angeles area, please include me.