Happy #WellTailoredWednesday! As many of you know, commercial real estate is expensive. It just costs “a lot” of money to acquire and manage large real estate deals. However, a large portion of this money can be financed through a variety of sources, such as bank debt or “other people’s money” (OPM). Raising these funds is vital for any real estate investor, according to Hunter Thompson, author of Raising Capital for Real Estate. This book provides a guideline on how to get started with raising money and to grow your business.
Raising Capital — An Ongoing Process
The most important theme of this book is that raising capital for real estate is an ongoing process. There’s no “off switch” for fundraising. It’s a machine that needs to keep going if you want to be successful in scaling your business. Michael Blank, author of Financial Freedom with Real Estate Investing, mentions this as well and Hunter goes into it in more detail.
Of utmost importance is establishing yourself as a credible source of information, specifically within the real estate space. Those of you who know me know that I’m a big advocate of personal branding. It’s actually why I built this blog in the first place! That’s been my goal over the past couple of years: to go from being known as “the advertising guy” to “the real estate guy” in my professional and personal circles. Hunter stresses how important it is to build credibility in the space with prospective investors.
From there, it’s important to show them that you’re willing to do whatever it takes to succeed in this business. Ideally, this would translate to showing that that you would be a trusted guardian of their capital.
The most important trait that inspires high performers to build a relationship with you: the ability to display an undying, unwavering sense of urgency to accomplish your goals…By intentionally demonstrating this trait, you’ll create the notion that you’re going to succeed, it’s just a matter of who comes along for the ride.Jamie Smith, principal at Elevation Capital, on Episode 66 of the Cash Flow Connections podcast (pg. 51).
Communication, Communication, Communiction
The next big theme outlined in this book is the importance of communication with investors. Obviously, we all know how important is it to speak to people you’re trying to raise money from. But Hunter outlines the entire process of establishing that communication. He walks you through how to build initial marketing touch points, such as from a blog post or podcast episode. Then there’s an entire section devoted to the ever-important legal side of raising money and sending investors the deal’s Private Placement Memorandum (PPM). He even details out the logistics of hosting a networking dinner, which I don’t think is mentioned in any other real estate book.
It’s refreshing to hear Hunter’s transparency with his initial missteps on raising capital. He’s very open about coming away with $0 in his first capital-raising attempt, despite pitching to a room of 30 accredited investors and having a two-year track record of successful investing. Of course, over time he’s been able to finesse this skill and has gone on to raise millions of dollars.
Overall, this is a must-read for anyone looking to scale their investment career to the next level. I’ve been a huge fan of Hunter’s since he started his Cash Flow Connections Podcast, which I highly recommend subscribing to. He has a unique ability to dissect complex pieces of data and translate them into very digestible content.
This book in particular has a good mix of tangible advice on raising money and motivation to keep going. We’re all familiar with those tripe self-help books from gurus who promise to outline the tools they use in their business…but only if after you sign up for their Platinum package for only $3,999!
Hunter is very different because he delves into exactly how he’s able to raise millions of dollars from investors. He goes over the high-level strategies (ex. On due diligence calls, sprinkle in a few conservative assumptions that aren’t outlined in the Executive Summary (Pg. 170)) as well as the specific software he uses (MixMax email tools (Pg. 105)). Although I was able to get this book for free after meeting Hunter at the Best Ever Conference 2020 this past February, the information outlined in this book easily make it worth its price. For all these reasons, I give this book a 5/5.
Read if You:
- Need to raise capital for your business (duh!)
- Want to capitalize on your rolodex of potential investors and partner with experienced operators
- Currently raising money but want to build systems to scale your efforts
Don’t Read if You:
- Don’t already have a basic understanding of real estate concepts. If this is you, I’d recommend starting with Commercial Real Estate Investing for Dummies.
- Not committed to taking action. It would be a waste to just keep this on your bookshelf without trying to implement his advice.
- Need convincing why real estate is the asset class for you. It’s probably best that you read Rich Dad, Poor Dad first.
I’m unaffiliated with Hunter, but if you’re interested in learning more, check out this link. Be sure to check out my other book reviews here. Thanks for reading and please feel leave your thoughts in the Comments’ section below!