April 8, 2025 • 43 mins
In this episode of the Main Street Business Podcast, Mark J. Kohler welcomes real estate investor Hunter Thompson to uncover how to raise capital legally and effectively in today’s skeptical, high-interest market. From 506(c) strategies to scaling with the fund-of-funds model, this is a must-listen for serious investors.
Here are some of the highlights:
- Mark and Hunter underline the importance of having the right strategies and tactics to attract and retain investors in a competitive market.
- Hunter shares insights on the difficulties of raising capital, including the need for effective marketing and investor education.
- Mark Kohler and Hunter discuss the role of influencers and content creators in attracting and educating investors.
- The need for real estate investors to become more visible and active in the market to attract capital.
- Hunter explains the challenges of finding good deals in a competitive market and the importance of being prepared for market downturns.
- Mark lists the benefits of self-directed IRAs, including the ability to invest in real estate and the tax advantages.
- The challenges of navigating the regulatory landscape and the importance of staying compliant.
- The importance of staying informed and connected in the real estate investment community.
- Grab my FREE Ultimate Tax Strategy Guide HERE!
- You don't want to miss this! Secure your tickets for the most significant business, tax & legal event of the year: Main Street 360
- Looking to connect with a rock star law firm? KKOS is only a click away!
- Are you ready to get certified in EVERY strategy I teach? Start your journey with a FREE 15-minute discovery call to explore the Main Street Tax Pro Certification.
- Check out our YOUTUBE Channel Here: https://www.youtube.com/markjkohler
- Craving more content? Check out my Instagram!
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Welcome to the Main Street Business Podcast with
your distinguished hosts, mark JKohler and Matt Sorenson.
Both are best-selling authorsand have over 25 years of
industry experience, with 10,000client consultations, making
them the leading tax and legalexperts in the nation.
Together, they'll unpack themost complex tax, legal and
financial strategies crucial forsaving more, stressing less and
(00:23):
building generational wealth.
Today they're your personaladvisors, ready to break it down
for you and make the tax andlegal game easier than ever.
Here is Mark and Matt.
Speaker 2 (00:34):
I've raised around $100 million from hundreds of
investors.
I've done it with every flavorand basically every real estate
and non-real estate transactionthat exists.
People are freaking scared, andat some point the scales will
tip from fear of investing tofear of missing out.
When you're having thosemoments of stealthed out, that's
when you can buy the best deals, and so that's the most
(00:54):
important part of the wholecycle.
Speaker 3 (00:56):
Sometimes people need a reality check of this
trajectory.
That really isn't sometimes allit's cracked up.
I got people with moresyndications looking for deals.
Fewer deals out there.
Is it worth it?
Speaker 2 (01:06):
So you want more top-line revenue.
The way that you do morescalable sales is through
marketing.
Speaker 3 (01:15):
So for people out there, they're great in the
presentation room, but theydon't want to be an influencer.
Is there another way to attractthese investors?
100%.
Well, Hunter, welcome to theshow.
I'm so excited to be here withyou.
We have so many clients,followers of ours around the
(01:40):
country that are raising moneyfor real estate deals, and it's
an art and there's alwayssomething to learn there.
So we're excited to hear howyou pick your brain, understand
how you're conquering the worldand what you're up to.
Speaker 2 (01:56):
So first, welcome, glad to have you.
It's an honor to be on.
Much appreciated.
Speaker 3 (02:01):
Let's just give us a little flavor here of what
you're doing right now outraising capital for a deal,
maybe right now and get us kindof in the conversation.
Speaker 2 (02:11):
So right now we are raising money for a Phoenix
multifamily deal and this isbasically all I do.
We have a basically a 40 mileradius where we buy in Phoenix,
b class, a class apartments inPhoenix B-class, a-class
apartments usually 1980s torecent 2000 builds and, look man
, it's hard to raise money rightnow.
(02:33):
So if you don't have the tipsand the strategy and the tactics
and the technology that we'regoing to talk about today, my
goodness, you might be leftbehind and you're going to miss
this opportunity.
Because 2025, everyone's beentalking about survive until 2025
.
It's here, and the reason theywere talking about that is that
if you can survive until 2025and go all in right now, it's
going to look very different by2027.
So I'm excited to jump in.
Speaker 3 (02:55):
Well, tell me what.
When you say it's hard to raisemoney, what type of money?
What do you mean by that?
Speaker 2 (03:01):
I raise capital from LP investors, accredited
investors, high net worthinvestors, but also from
institutions and family offices,and what's happening now is
that people are still dealingwith the wake of many investors
lost money for the first time in15 years.
Some investors lost money forthe first time ever because the
first deals they invested inwere in the run up post 2008.
(03:24):
And so we went 15 years withoutyou really hearing stories
about people losing money indeals.
And then, all of a sudden,interest rates rose faster than
they've risen in 40 years andall of a sudden you've got
potential for distress in themarketplace and it's difficult
to raise money now compared towhere it was five years ago.
But that's how you know you'rebuying good deals.
That's the nature of what meansto have a distressed
(03:46):
marketplace.
Now, it's not broadly distressed.
It's not that hundreds ofthousands of multifamily
properties all over the countryare distressed.
But when I talk about raisingcapital, that's who it's from
and that's the kind of stuffthat I raise capital for.
But the stuff that we'll kindof get into today about like
attracting leads, nurturing them, converting them, it applies to
any real estate asset class orany non-real estate asset class.
(04:08):
It's basically, you know howcan I get someone who's never
heard of me to fund investments?
And you know, that's the nameof the game.
Speaker 3 (04:17):
Wouldn't you say that , I think 15 years, long time
ago.
Everybody's forgotten.
You know, there was amultiplicity of reasons why
there was a real estate bubbleand the quote unquote crash
Isn't more of the difficulty inraising capital competition.
I don't know if it's themarketplace.
(04:39):
People want deals and interestrates can give us other benefits
Higher interest rates as aninvestor, hedging against
inflation and buying real estateis a great deal.
But I mean, it seems to methere's a lot more people in the
marketplace that's got a fundEverybody, anybody, got a fund,
you know and they're trying toraise capital and I think the
competition for that dollar ismore of an issue.
(05:01):
But you're saying it's maybefear or I mean.
Speaker 2 (05:06):
So I've been in this business for a while, I know you
have as well, and so,essentially, we had an explosion
of the popularity ofnon-institutional investments in
the private sector, meaning506B, 506c funds, single asset
investments, multifamilyself-storage, mobile home parks,
office industrial, you name itright.
(05:27):
20 years ago, outside of, likethe country club circles, there
weren't a lot of people talkingabout investing in syndications
or the common vernaculars likecrowdfunded tools, and so, in
2012, the JOBS Act was ratified,which I believe was actually
opened up in 2013.
And it allowed you to, for thefirst time, to talk about real
(05:48):
estate deals on the internet,and this basically created the
birth of the syndicated slash,crowdfunded popularity that I'm
talking about.
And so, yes, you're right,people got into the space for
the first time.
People heard that you could goand invest in an office
industrial complex in Texas forthe first time.
People heard that you could goand invest in an office
industrial complex in Texas forthe first time, and so you got
(06:09):
all these new investors into thespace, and so, from that
perspective, it is morecompetitive.
However, it's more competitivebecause it's way more popular,
so now you've got way moreaccredited investors that are
knowledgeable about the factthat you can invest in these
deals, credit investors that areknowledgeable about the fact
that you can invest in thesedeals.
So I think the real issue isn'taround how many people are out
there trying to do this.
(06:29):
It's that people are freakingscared.
People are scared and at somepoint the scales will tip from
fear of investing to fear ofmissing out, and so that's why I
said in the introduction I'mhere to start alerting people
that that fear of missing outthing, that scale, is going to
be tipped here in the next 24months and then the deals aren't
(06:52):
going to look nearly like theylook right now.
Speaker 3 (06:54):
Okay, okay, maybe we'll come back to that fear
point.
I want to also put this inperspective.
For so many of our listeners,there's generally three ways to
raise capital.
I can, when it comes to a andthe I word is a swear word, you
know the investor word is a verydirty word.
We got to be careful how we usethat right.
(07:14):
And so I may say I need moneyfor my project, so I'm going to
go get a lender.
So a lender might do a firsttrust deed, I might have a hard
money.
I might have a hard money, Imight have some sort of lend
scenario, but they're not aninvestor, they're a lender.
Different rules.
And then number two I mightjust partner with someone and I
(07:36):
might be able to get to up tothree or four lenders or three
or four partners, maybe five orsix even in an LLC.
Raise capital as a partnership.
We're cool.
We're not in the SEC, purview,securities and Exchange
Commission.
I'm not having to build a fund,I'm not having to build a
syndication.
Heck, I could raise 100 millionwith five guys or 1 million
with five guys, whatever, butI'm partnering.
Then we get this investor lane.
And, by the way, some peoplemay say well, let's partner and
(07:59):
I'll give you some interest anda piece of the equity.
So it's kind of a participatingloan scenario.
But those two lanes.
Initially I take it you're notplaying over there.
You're like nope, we're doingfunds, we're dealing with
investors and, based on the typeof fund, we might not have to
go after accredited investors orwe might have to.
(08:21):
I guess we'll come to that.
But are you doing any lendingor partnering, or is it all kind
of more money raised withinvestors?
Speaker 2 (08:28):
Really good question.
So the important distinctionwhich you're getting to, which
is the third piece, is thiselement of control.
So in your example, whereyou're having a partnership with
five people, or we also call itlike a joint venture agreement,
all those people basically havean equal seat at the table.
All those people basically havean equal seat at the table.
But the SEC views it as amaterial shift when you start to
get to 7, 8, 9, 10 investors,let alone 100, there's no way
(08:53):
100 people can all have anactive role.
At some point you're kind ofdeferring to a third party,
which is one of the criteria ofcreating a security.
So in the world of creatingsecurities, when you have, like,
let's say, a hundred investorsthat are each investing 50 grand
or a hundred grand, you've gotto do this different level of
compliance.
You got to hire a reallyexpensive attorney and you've
(09:13):
got something like an operatingagreement and a private
placement memorandum which isset up to raise money from a lot
of people into, let's say, onedeal or a fund or something like
that.
And so, to answer your questiondirectly, I prefer that
crowdfunded quote syndicatedmodel for real estate, because I
want to buy bigger and betterdeals and maybe you've got a
(09:33):
couple of contacts where I canget four people to invest $30
million a piece.
But because I mostly hang outin the world of accredited
investors investing a hundredgrand, 200 grand, maybe half a
million bucks, it's going totake a lot of investors to buy
this property we're about to buy.
That's going to be $20 millionpurchase where it's about a $7
million capital raise or $10million capital raise.
(09:54):
So when I get into that worldto your point, more legal
structure, information, more SECcompliance, more dollars with
attorneys, but it opens you upto buying institutional quality
assets in great markets thatrequire quite a bit of money to
acquire.
Speaker 3 (10:12):
No, no, absolutely.
And we have clients they say,well, I want a silent partner.
Oh, you want an investor,you're in lane number three.
So for people out there thatare saying, well, I want to
raise a million dollars or $10million or what, what have you?
Um, it's a democracy in apartnership.
(10:33):
Um, if you want to have controlwith, there's still guidelines.
I mean, you got to meet yourwhat you're promising your
investors but, um, I I'm.
This is good.
I wanted to make sure.
We're talking about lane threetoday, and that's what I was
trying to get at is, for ifyou're a listener, you may be
able to raise all the money youneed to and do all the deals you
want with a as with, throughthe lending model or a
(10:55):
partnering model.
But again, as you're goingafter these bigger deals, I
might need more people, moremoney than I.
Go down to the syndicationroute.
What, what reg do you likeright now?
I mean, I guess let me say itthis way too Could you explain
from your perspective, as you goout to raise money, depending
on how you advertise, I'm goingto have to stick to accredited
(11:19):
investors or maybe I can do somenon-accredited, depending on
how I advertise.
Can you explain yourperspective on that and which
within that lane, which one you?
Speaker 2 (11:29):
prefer?
Sure.
So and this is coming fromsomeone just for context for
people that are not familiar soI've raised around a hundred
million dollars from hundreds ofinvestors.
I've done it with every flavorand basically every real estate
and non-real estate transactionthat exists, and I originally
did this as a fund of funds andthen later as a registered
representative under a brokerdealer, and now I do this
(11:50):
exclusively as a general partner, buying deals directly, where I
raise money only for my owndeals.
So I've been through a lot inthis industry and that's not
even a flex, I'm.
Actually I wish I hadn't beenthrough so much.
I wish I had figured out mycurrent lane way earlier, trust
me.
But I work with a lot of greatgroups that have different
perspectives and a lot ofdifferent attorneys, and so
(12:12):
here's my view on all this.
There are regulations that allowyou to raise money from
non-accredited investors, andthe most common one is Reg D
506B, as in boy, and what thismeans is it's an exemption from
going public.
So when Tesla goes to raisemoney, they do so in the public
markets, but if you're going toraise money for a real estate
(12:34):
deal, you don't want to getcrippled by the regulatory
burden of what it means to takea real estate deal public.
I'm not talking about a realestate company.
I'm talking about you'reraising money for a deal, so in
that case you need an exemptionfrom going public, and one of
the most popular exemptions isthat Reg D 506B, as in boy.
It allows you to have up to 35non-accredited investors in the
(12:56):
deal through a syndication, andthe rest have to be accredited,
and the way they verify this isthey basically check a box
saying that they're accreditedBasically means they make more
than $200,000 a year, or$300,000 a year with a spouse,
or have a million-dollar networth minus their primary
residence.
Speaker 3 (13:12):
There's other definitions and I want to
digress there for one minute foreverybody.
I was just going to ask can wedefine that for everybody?
Accredited investor let's justcall them a super investor.
Whatever they have $250,000,have 250 or 300 grand of income
and a million dollars in thebank or per se of equity
somewhere not in their home andpeople raising money out there
are going to want to have aletter from an attorney or a CPA
(13:33):
to verify that so they don'tget in trouble taking money from
someone that really is not asuper investor.
Speaker 2 (13:39):
But I would say one thing cause.
It's important distinction.
With 506B, as in boy, therequirement is that they check a
box that they are accredited.
And the reason I had to jump inthere is that there's a
different regulation 506C, as inCharlie where it's actually
required that all investors areaccredited, but they can't just
(13:59):
check a box to say that they'reaccredited.
They have to have that letterfrom an attorney or a CPA saying
that they're accredited.
So the reason I mentioned thatis that that extra layer of
scrutiny has a benefit.
Yes, they all have to beaccredited, they all have to
have that letter, but then, forthe first time, it allows you to
publicly advertise or generallysolicit for deals.
(14:22):
So with 506B you can't go on apodcast and say I've got a deal
right now, go to asimcapitalcom.
If we're using a 506C, I cansay that, which, by the way, is
one of the reasons why we use506C, because I'm on a podcast
right now.
I don't want to be worriedabout breaking the rules.
So there you go.
Now there's other things we canget into, but those are the
(14:43):
kinds of regulations Most of thepeople that do real estate
deals in our niche those are thetwo regulations they use.
Speaker 3 (14:52):
No, absolutely.
In our office we do Reg B andReg Cs and PPMs and I think we
should tell people too.
You're looking at our officewe're around 25 grand to 30
grand to really build thatsyndication out, and that sounds
like a lot to some people todeal with lawyers.
But I also have people go outand step into a law firm that
wants to charge them 60 or 70grand and it's just highway
(15:12):
robbery in my opinion.
So you got to be careful outthere as you shop for that.
I really want your take onworking with lawyers in this
process, which is probably thebane of your existence.
So I want to make thisdistinction for everybody.
We've got these two options.
You call them public,non-public, and I kind of like
that.
That non-public is I can raisemoney from family and friends,
(15:34):
but I can't post on the web.
I can't say I'm on social mediadoing this.
I can't go on a podcast and sayI'm doing this, but it's a lot
easier from a regulatorystandpoint.
But I can't go publiclyeverybody and go tell them about
it over here I can go oh man, Ican go public all day long,
tell her I'm doing a, la, la, la, la la.
But the only people that caninvest with me are these
accredited investors with averified letter that they are
(15:57):
accredited.
And what you're telling me isyou like option two, so you can
go out to the world and la, la,la la and let everybody know
what you're doing?
Speaker 2 (16:04):
I would just say and this is not legal advice, but
from a business standpoint Ipersonally prefer to work with
accredited investors only, and Ijust think it makes the
business more scalable.
I think accredited investorscan invest more.
They're far more likely toreinvest.
They're far more likely to knowother accredited investors.
Don't misunderstand me.
It doesn't mean that I don'tlike non-accredited investors.
(16:25):
In fact, I very much got intothis industry because I wanted
to help all people get money outof the stock market casino.
But after dealing with trialsand tribulations over the last
decade or so, that's just mypersonal perspective.
So I wish the regulationsweren't written the way they
were.
But because they are, that'sthe way we decide to go.
Speaker 3 (16:43):
I hear you.
I hear you, and a more educatedinvestor actually makes it
easier to do business.
I get that for sure, yes.
So well, now we're to the cruxof the conversation Going out
and attracting accreditedinvestors, finding them, letting
them know.
What you're trying to do and Iknow that's been one of your
(17:07):
main topic of one of your booksand what you talk about a lot is
how to help other real estateinvestors find accredited
investors.
You say a lot of them areafraid right now.
Speaker 2 (17:16):
okay, but maybe your first thoughts on helping people
find these accredited investorsand get them to take action, I
think when I got into this worldof finance and real estate,
it's probably because of thesame reasons that a lot of
people listening to this showget in this world is that we
want to make money for ourselvesand our family.
We want the benefits fromdepreciation and cashflow and
(17:40):
later appreciation and thesetypes of things.
We got in this industry becausewe want to do deals, and what I
have found is that we becomereal estate or private equity
nerds in pursuit of the rightthing, which is focusing on
deals, but what ends uphappening is, when you want to
raise money from, as you said,silent partners, when you want
(18:00):
to raise money from LP investorscall them dentists, doctors,
lawyers, high incomeprofessionals they are not real
estate nerds, they are nerds oftheir profession.
And so what I did is the firsttime I tried to raise money, I
found this perfect deal and gotin a room of 30 accredited
investors.
So think about $30 million innet worth or something like that
(18:20):
and I just presented the crapout of this deal or something
like that.
And I just presented the crapout of this deal 10% cap rates
growing in robust markets.
It's the mobile home parkindustry, where they don't even
own the parks themselves.
You just own basically a lotand the homes are positioned on
the lot.
They basically pay you rent.
It's the best business model ofall time.
The problem is, nobody caredEven though they knew, liked and
(18:44):
trusted me, nobody wasinterested in investing in the
mobile home park business.
They didn't know what a caprate meant, they didn't know
what debt service coverage ratiowas, and so I was finding
myself pitching this deal topeople that were uninterested,
not motivated, not emotionallyready to invest, and I fell flat
on my face.
I raised $0 on my first capitalraise, and so what I've done
(19:07):
over the last, however long, isnever gone through that again.
I built a system for attractingleads, educating them through
things like podcasts, events.
We have an event coming up,there's also my book and stuff.
I'm doing all of this in apursuit of building notoriety
and reputation and gettingattention, which is the top of
(19:29):
what we call the funnel, whichis an inverted triangle, and at
the top you have attention.
Then you convert that attentionto a lead by doing things like
webinars, podcasts, downloadreports, economic updates, excel
models that people can puttheir first name, last name,
email address, phone number inand exchange for that digital
knowledge product, and then Ihave them in my world, and so
(19:53):
that has a lot more to do withraising capital than just
forcing debt service coverageratio down the throat of a
doctor that doesn't know whatthat term means, and so that's
what we do at raisingcapitalcomwe help people build that kind
of system.
Does that make sense?
I know it's not new to you, butfor some people they never
thought they would be in theworld of content creation and
podcasts.
(20:13):
But of course, that's how yougenerate a lot of your business,
and I'm just hoping peoplelistening to this will start
doing the same for theirs.
Speaker 3 (20:19):
Yeah, it's a great point Raising capital.
If you can increase yourcredibility and get them
drinking your Kool-Aid and getthem in your world, it
definitely generates those leadsand helps you close them.
And that's very uncomfortablefor some people and they don't
(20:40):
know that they're better outfinding the deals, they're
better out managing the dealsand they're great in the
presentation room, but theydon't want to be an influencer,
they don't want to be out theretop of funnel.
Are you saying a syndicationreal estate investor should
(21:01):
partner with someone that wantsto play that role, or is there
another way to attract theseinvestors without being an
influencer?
Speaker 2 (21:08):
There's two things I want to touch on, because all of
those are options, but what Iwant to call people out on is
that, if you're the kind ofperson that's obsessed with the
details, right, you're focusedon operations.
You know the market like theback of your hand, you know all
the comps, you know focused onoperations.
You know the market like theback of your hand, you know all
the comps, you know all thecompetitors, you know all the
property managers in the areaand you've got a strategic
(21:29):
advantage.
You owe it to your investors,or potential investors, to rise
to the occasion and do what I'moutlined.
It doesn't have to be me, youcan listen to anybody, but we're
all saying the same thing toraise a bunch of money and to
buy bigger and better deals andmore deals, and to get more
people out of whatever crazyinvestments they're in and into
(21:52):
your predictable cashflow typeof opportunities.
You've got to be able to be alouder version of yourself, and
so the people that cringe themost are the exact people.
I want to do this because theengineers, the scientists, the
people that are sometimescrippled by analysis, paralysis
and also, by the way, impostersyndrome, which is more common
(22:15):
for people that are moreintelligent.
Those are the people that Iactually want to succeed in this
industry, because they willactually be the ones that are
skeptical of doing bad deals.
But what I'm talking about isso powerful that if idiots do it
, they will also raise a bunchof money, but the deals will go
bad, and so that's kind of thereality.
(22:37):
I don't want people to shy awayfrom the fact that you want
more topline revenue, and theway you get that is by raising
capital, and the way yougenerate more top-line is by
sales more scalably, and the waythat you do more scalable sales
is through marketing, which iswhat this conversation is all
(22:58):
about, whether people know it ornot.
Speaker 3 (23:00):
It's about marketing attention and in converting that
attention to dollars 20 yearsago, marketing consisted of
holding a dinner, invitingpeople out or not.
It's about marketing attentionand in converting that attention
to dollars.
20 years ago, marketingconsisted of holding a dinner,
inviting people out having alittle presentation.
Now we've got all theseplatforms and ability to get in
front of people.
Do you ever feel like it's somuch work to do the big deal?
(23:24):
You're like I could just makeas much money with the little
deal, that constant pursuit.
You're like you know what?
It's not worth it.
You could have three guys on adeal and make the same as
managing 40 investors on amassive deal and all the
headaches I prefer, let's say, a$20 million deals.
Speaker 2 (23:43):
But the reason I prefer them is I can't buy $100
million deals yet notconsistently and so I want to be
in quality assets in primemarkets and so, generally
speaking, there's usually somereally good deals in the $40,
$50 million range.
(24:03):
You start to be competing withinstitutions that have lower
cost of capital at that range,so sometimes 20 million is kind
of the perfect little elementthere 20 to 40 million but I
never want to go to 10 becausethe amount of work I have to do
is very similar between a 10million, a 20 million, a $50
million deal.
So that's just my perspective.
I'll give you some other nuancethere, which is that once you
start buying deals that are,let's say, 60 units or less in
(24:27):
multifamily, you don't reallyhave the economics of scale.
Economies of scale to have afull-time property manager on
site.
You also have smaller physicalstructures, so there's not as
much tenant diversification.
So it all makes sense to kindof plant your flag in the ground
at a certain point, but most ofthe time people are planting
their flag in the ground notbecause of anything I just said,
(24:47):
but because they can't raisethe money.
That's the number one limitingfactor in almost every private
equity business that exists isthat they don't have leads
coming in, they don't have asystem for attracting and
educating and nurturing andclosing them, and so they're
stuck playing, going deal todeal, scrambling every single
time they put something undercontract.
And I don're stuck playinggoing deal to deal, scrambling
every single time they putsomething under contract, and I
(25:09):
don't want people to be limitedby that.
I want you to be able to playin the space where you want,
regardless of the money you canmake.
I don't want you to be limitedby capital.
I want you to be limited by thespace and the amount of deal
flow and the economies of themarket.
Speaker 3 (25:26):
I love that and I like how you said that this
conversation really is aboutmarketing for all intents and
purposes.
How do you attract thoseinvestors and, like you said,
bring them into the funnel andnurture them and close them?
I guess what I'm getting at andI'll ask it in another way is
sometimes people shouldn't dothat.
Like you know, just because youcan doesn't mean you should,
(25:48):
and I have some clients that arelike oh, I can't wait to do my
$20 million deal.
I go do you know what you'regoing to be doing for a $20
million deal?
It's very different than a $2million deal.
You're not going to be wearinga tool belt anymore.
You're not going to be doingthis, you're not going to be
doing that.
You're going to be on the phoneand kissing the ass of
investors every day and theemails and dealing with
accountants and getting outreports and dealing with audits
(26:11):
and that.
That is that what you want to bedoing.
Or do you want to be doing adeal?
You want to be on the dirt ordo you want to be behind a
computer screen?
And they're like, well, no, butI want to's big deals, and it's
like, no, you don't and I don'tknow.
I think sometimes people need areality check of this
trajectory.
That really isn't sometimes allit's cracked up to be Dude that
(26:34):
was the story of 2019, 2020,2021, 2022.
Speaker 2 (26:39):
And then, all of a sudden, all this distress takes
place, and it's not widespread,but it's very specific to
multifamily and prime markets,where people use floating rate
debt, and only then can youactually figure out if you want
to be in this industry.
I mean, it's easy when realestate's the number one wealth
creation vehicle in the historyof the country.
(26:59):
It's not as easy when you'vegot people that invested money
and lost money, even if itwasn't on you, even if it wasn't
even in your deal, but you justgot to hear stories about
people that have lost money.
That is a weight that few canand should bear, and so I mean
(27:20):
that, to me, is the kind ofthing like are you actually cut
out for this industry?
Like, because people talk aboutI'm going to go left, when
everyone's looking right, yeah,right, okay, cool.
Why don't we wait and see whatthat actually feels like?
Because what it usually feelslike is that when that actually
happens, when that moment takesplace, people go well, not like
this, this doesn't freakingcount.
(27:40):
This is an insane once ageneration black swan event.
Every single time.
It happens every seven to 10years and I get that and I've
had those thoughts and I've lostsleep over things and I have
done deals that have lost money.
I've done a lot of deals andmost real estate investors that
have done a lot of deals havelost money on deals.
But does it kill me?
Yeah, but I owe it to myinvestors to keep freaking going
(28:05):
, because I know that when itcomes to due diligence and
operations, I mean, we know whatwe're doing, and so I owe it to
overcome those challenges andthat frustration and those
self-doubt feelings to stay whenit matters, because, holy crap,
that's when you can buy thebest deals.
When you're having thosemoments of self stealth, doubt
(28:27):
and you're hearing stories aboutinvestors having lost capital,
that's when you know you'rebuying right, and so that's the
most important part of the wholecycle.
Speaker 3 (28:36):
So what are your biggest challenges in your
process right now for raisingcapital and the deals?
Is it finding deals or findinginvestors?
Two, both are difficult.
Speaker 2 (28:49):
Both are difficult and the emotional element of
both of them.
But I will say that, like youknow, going back to, let's say,
2019, 2020, if we would put outa deal in a prime market in a
asset class that people arefamiliar with, you could fund it
in a matter of hours or minutesin some cases, and what ends up
happening when there'shesitation in the marketplace is
(29:12):
that people start findingreasons not to invest in deals
because the FOMO isn't there.
That's still.
The emotional rollercoasterthat they went on is still
present in their mind, and sowhat ends up happening now is
like this deal that we're aboutto close.
On every metric that you coulduse to determine how risky an
(29:32):
investment is compared to twoyears ago, it's cranked all the
way the other direction, Meaningfixed rate debt, five-year term
, sub-70% loan to value agencyfinancing a business plan where
the property is alreadyrenovated and the seller is
simply selling at a basis that's22% to 25% below where they
would have sold two years ago.
(29:53):
So you're literally justbuying-.
Speaker 3 (29:55):
There's not as many deals.
Yeah, you're looking for dealsand they're not out there.
Speaker 2 (30:01):
That's right.
They're only out there ifthey're forced to sell.
But the challenge is that whenyou present that metric where
all those metrics are crankedthe right direction from my
perspective, investors now arelike wait a minute, this is a
1979 deal, we only want to do1980s or new.
Those are the kinds of thingsthat happen.
Everybody's greedy.
(30:21):
Yeah Well, they're veryhesitant and so good for them.
I wish there was more greed.
What I see now is that thatfear is hey, 1979 is not 1980.
So we're not going to invest inthis deal.
But what ends up happening isthat in a couple of years you
don't hear any questions aboutvintage or agency financing or
(30:41):
fixed rate versus folding rate.
The money just flows through.
That's when it's easy.
That's when you should maybetake a pause.
Speaker 3 (30:47):
All right, I want to throw out what I think is going
on out there and I want you toargue with me or tell me if tell
me I'm wrong and give me alittle bit of background.
I think back from 2016 to 2021,everybody started to go all
right, single family homes,we've done our thing, we're
going to multi-unit, we're goingto commercial, we're going
(31:08):
everybody and their dog.
And there's only so muchinventory.
In the U S, you can go to anymid market major market city.
A lot of investors.
They've got a spreadsheet ofevery apartment building within
10 to 50 million right there ontheir spreadsheet.
Everybody knows what'savailable.
It's not, you know, millions ofhomes.
These are, you know, hundredsof thousands of apartment
(31:28):
buildings.
There's only so much inventory.
So in 2016 to 2021, everybodythat was anybody and the
institutional money startedbuying this crap up, rehabbing
it, creating a cap rate, fixingit, and there's just not as many
deals right now.
No one's like, and.
But meanwhile everybody elsestarted to say, well, I'm going
to get on the bandwagon and I'mgoing to have a fun too.
(31:49):
And so now I got people withmore syndications looking for
deals fewer deals out there thathaven't got an edge with some
sort of intrinsic value that youcan improve on.
You're just buying cap ratesand they're not afraid.
There's just not deals.
I'm competing against privateequity in institutional money
that can write a check, and soit's made the market much more
(32:12):
tight and difficult.
I don't know about fear, but Ithink that's what's going on and
it's okay.
Go buy a cap rate.
That's all you're buying.
You know we got to get.
I don't know your thoughts.
Speaker 2 (32:26):
So some of this is market dependent.
But in Phoenix, for example,deal flow is down like 85% of
multifamily deals.
So that'll tell you a huge partof the story.
But, like I said, every singlemetric that you would use to
determine whether or not youwere buying right, like things
like positive leverage or costper door or things like that
that's all like way morefavorable.
(32:48):
So the idea that someone wouldexcept for interest rates, by
the way, which is, of course,extremely material, but there's
a big caveat to that, which isthat you would much rather buy
in a high interest rateenvironment and sell in a low
interest rate environment thanbuy in a low interest rate
environment, sell in a highinterest rate environment.
So the combination is both arehappening and it's not a
coincidence that both happen atthe same time.
(33:09):
You would only want to sellwhen you're distressed in
today's valuations, so there'sway that's both happen.
Deal flow plummets, valuationsalso plummet, and also investor
confidence and investment rateplummets, despite the fact that
there's plenty of dry powder andplenty of new market
participants and plenty ofpeople sitting on cash.
(33:30):
So this is the nature of themarket cycle, whether or not
it's deal flow or not deal flow.
I mean looking at the dealsthat we're looking at.
A lot of the deals we're doingin Phoenix right now are
off-market transactions.
The last two we closed aretotally off-market.
So there wasn't this massivebidding process.
There wasn't this massive 26offers.
It's just a matter of peopletrying to sell quickly because
(33:51):
they're distressed.
Speaker 3 (33:53):
Okay, so you're out there trying to attract
investors, and you're doing itthrough top of funnel, getting
investors trusting you,believing in you.
So when you have a deal, you'vegot your investor pool ready to
go, and then your book is abouthey, be like me.
And so you're creatingcompetitors for that same dollar
(34:15):
, which is a little surprising.
Why do you do that?
Why, I mean, there's only we.
We just identified the factthat the with interest rates and
the deal flow down 85%.
We've got every Tom, dick andHarry setting up a fund Holy
crap, snoop Dogg has one andthen now you're going to go out
and teach everybody how to dowhat you're doing and compete
(34:37):
with you for that powerful spaceon the web and for book sales.
Is it worth it?
Speaker 2 (34:44):
Yeah, probably not, probably not for book sales, but
there's two pieces of this.
One is really easy to justifyOne.
I freaking love it Honestly,like this is my calling.
In life, I've raised a lot ofmoney.
There's people that have raisedway more money than me, but in
terms of like gettingfulfillment from seeing people
go from no background in privateequity to raising their first
(35:07):
million, or people that havealready raised $300 million and
raising a next hundred millionway easier because of something
I've said, this is like thething that this is the reason
I'm on this podcast right now isI freaking love this game.
You can add a zero or a commain my bank account.
I would still be doing thisexact interview, right?
So you've you've made yourmillions.
Speaker 3 (35:24):
You're like all right , I'm going to teach people how
to do it, even if they takedeals from me.
Speaker 2 (35:28):
Oh don't no, no, no, no, because it's always
self-storming in some way.
The first reason is fulfillment.
The second reason to that,obviously A we can partner with
other people that can raisemoney.
Speaker 3 (35:39):
Oh so you're wanting them to bring you deals.
There's your deal flow piece,baby and capital Right.
Speaker 2 (35:45):
And capital.
So I'll break down this from astructural standpoint.
One of the things I talk aboutfrequently is this concept of a
fund of funds, and soessentially what we do at ASIM
Capital is my private equitycompany.
In every deal we do, we have aspecial class of shares where,
(36:11):
if you invest a half million ormore, you get about 30% more
economics into your entity.
So if you invest half a million, you get an 80-20 split, versus
a typical investor investing100 grand.
That gets a 70-30 split, andwhat this creates is an
opportunity for someone that's adoctor to pull 10 doctors
together that are investing 50grand a piece to invest into our
(36:31):
next deal, and that way I teachpeople how to do this.
They can do it for their owndeals, whatever they can also do
fund to funds for other people,but of course, I'd much rather
them create a fund of funds toinvest in our next deal, and
this is how we raise a lot ofour money, given the success of
the book and our conferences andthings like that.
So that's your answer.
(36:52):
And also, by the way, we have acoaching program, which is you
know, it was scaled from zero to10 million in 31 months.
Those are very self-servingissues and not just based on the
fact that I want to be a goodperson.
Okay, there you go.
Speaker 3 (37:06):
I like it, I like it.
So when's your next conference?
Speaker 2 (37:10):
We have one coming up in Phoenix February 19th
through the 22nd.
It's called Raise Fest.
You can check it out.
Raisefestcom.
It's just about raising money,so not about what a cap rate is,
not about how to find goodmarkets, but basically what
we're talking about today.
Speaker 3 (37:26):
Okay, and that's great, talk to me about your
accounts and lawyers.
What's your challenge there asyou work with professionals?
Speaker 2 (37:38):
It's so integral to the process and when you do
events and all that 100%, andit's a big part of the industry
and it's a big part of why somepeople leave the industry,
because it's a very regulatedand potentially litigious
industry and there's a weightassociated with that.
And what's also interestingabout this industry is that,
because the nature of marketcycles, you can be a market
(37:59):
participant for 10 years and noteven know the regulatory
implications until somethinggoes wrong and, by the way, when
something goes wrong, usually alot of things go wrong and all
of a sudden, this regulatoryburden can collapse these
businesses.
So that's the first thing I'llsay.
However, when I married my wife, we did our vows.
(38:20):
Her vows were really great.
I cried a lot, by the way.
We changed rings and I turn andI see my securities attorney
smiling back at me and I go howmuch money did I give this guy
that he's literally at mywedding?
Speaker 3 (38:37):
And um see how much his fee is for a PPM yeah,
exactly.
Speaker 2 (38:40):
So I mean, he may have ruined my wedding, but I
love him.
By the way, his name is Peterand um, so that should answer
your question right.
Like we have an ongoingrelationship, and it's important
, though, to remember thatattorneys and I think you'll
probably agree with this theirgoal and I a friend of mine
mentioned this metaphor.
I quite like it they'reessentially the referees of the
game.
They're not technically theregulators, but they know the
(39:01):
rules of the game.
If you wanted to learn how toplay the game, though, you
probably wouldn't go to areferee.
You probably want to go tosomeone who's actually playing
the game.
Some do both, but you get mypoint.
You don't want to go to anattorney and be like hey, how do
I raise money?
You want to go to an attorneywhen you're like this is the
deal I'm trying to do, this isthe structure I want to use,
(39:22):
this is what the waterfall isgoing to be, and it's buttoned
up.
And, by the way, attorneys willagree with me, because they
don't want to be consultants inthis capacity.
They'll burn themselves out ofa client running through legal
fees.
So you want to go superbuttoned up after you actually
have, like, a marketing deck.
That's a good time to go to anattorney, because they can
basically use that to craft yourlegal documents.
And how much have I paid?
(39:43):
I paid as little as 10 grand.
I've also paid as much as$80,000 for one deal.
So you know and you, by the way, generally speaking, you get
what you pay for.
So the numbers you were talkingabout before they don't scream
red flag to me, it screams.
You probably know what you'refreaking doing.
It's just an expensive thing todo, since 2008.
Speaker 3 (40:04):
As you know, our directed IRA fastest growing
self-directed company in thespace 2 billion this year.
Do you see a lot ofself-directed money in your
(40:24):
deals?
Do you like that?
I don't even know.
We're probably at your eventwith a table, I don't know.
But anyway, do you like thatself-directed model for your
projects?
Speaker 2 (40:34):
Absolutely, and this is a massive opportunity.
So it's a good tie into what wewere talking about before,
which is that most people don'tknow that this is possible, and
that's the reason you'reexperiencing.
Look, you're crushing yourcompetitors.
That's amazing, but there'salso a massive tailwind to the
industry because people are nowfiguring out that they can
self-direct their accounts, andso the likelihood that you've
(40:55):
got people that are in yourworld that don't know this is
high, so you can lead them tothis truth and then what you
know, help them self-directtheir capital and they can
invest in your deal.
Now, there are some stipulationsaround this, which is not news
to you, but like, for example,you don't want to have more than
25% of the money invested inyour deal to be ERISA funds or
(41:16):
these tax advantage accountsthat can trigger all sorts of
regulations, but other than that, it's a pretty good opportunity
to raise an extra dollar hereor there quite a lot of money,
by the way through these typesof accounts.
And also, if you're the personthat exposes someone and
educates them on the fact thatthey can take, like old 401k
(41:36):
capital from a job they nolonger work at and convert that
to a self-directed account,there's going to be emotional
buy-in there.
That's going to last way morethan just the 100k they may
invest with your deal.
So that's my perspective, Imean.
I'd like to hear yours, though,as well well in one sentence.
Speaker 3 (41:52):
When you go out to those quote, unquote, five
doctors or dentists or whoeverexecutive and you say, hey,
that's raised 500 grand.
Um, it's a lot easier for themto go get five buddies that have
a hundred grand sitting in anold IRA or 401k than 500 grand
cash in a bank account or abrokerage account where they got
to go look at their buddy theygolf with and take it out of
(42:12):
stock.
So the retirement accounts canbe so much more accessible and
easy to raise capital with, inour opinion, and the tax
benefits just are crazy.
So fun, all true.
Well, where do people get moreinformation about you, your
event and tap into some of thistraining you're doing for people
(42:35):
raising cap?
Speaker 2 (42:36):
There's a bunch of great content at
raisingcapitalcom that's ourcompany name.
Just go there.
But this event is going to beinsane.
Raisefestcom I'm going to bespeaking there, pace Morby is
going to be speaking there, codySperber is going to be speaking
there, ken McElroy is going tobe speaking.
I mean, what do you want, right?
Some of the best in thebusiness and also some people
that have raised their firsthalf a million dollars and it's
(42:59):
like, well, how did they unlockthat Right?
So, no matter where you are,there's going to be an
opportunity to learn, and one ofthe reasons I do the event is
that I want to freaking learn.
I want to stay ahead of thecurve as well.
So that's how I get my playbookfor 2025.
And hopefully I'll see youthere.
Just check it out atraisefestcom Love it.
Speaker 3 (43:17):
Well, hunter, thanks again for being with us.
Love it.
Thanks so much, so much goodinfo, and we truly wish you the
best, and thanks for sharingthese insights with our
followers.
So onward and upward, good luck, and the way that you do more
scalable sales is throughmarketing.
Welcome to the Main Street Business Podcast with
your distinguished hosts, mark JKohler and Matt Sorenson.
Both are best-selling authorsand have over 25 years of
industry experience, with 10,000client consultations, making
them the leading tax and legalexperts in the nation.
Together, they'll unpack themost complex tax, legal and
financial strategies crucial forsaving more, stressing less and
(00:23):
building generational wealth.
Today they're your personaladvisors, ready to break it down
for you and make the tax andlegal game easier than ever.
Here is Mark and Matt.
Speaker 2 (00:34):
I've raised around $100 million from hundreds of
investors.
I've done it with every flavorand basically every real estate
and non-real estate transactionthat exists.
People are freaking scared, andat some point the scales will
tip from fear of investing tofear of missing out.
When you're having thosemoments of stealthed out, that's
when you can buy the best deals, and so that's the most
(00:54):
important part of the wholecycle.
Speaker 3 (00:56):
Sometimes people need a reality check of this
trajectory.
That really isn't sometimes allit's cracked up.
I got people with moresyndications looking for deals.
Fewer deals out there.
Is it worth it?
Speaker 2 (01:06):
So you want more top-line revenue.
The way that you do morescalable sales is through
marketing.
Speaker 3 (01:15):
So for people out there, they're great in the
presentation room, but theydon't want to be an influencer.
Is there another way to attractthese investors?
100%.
Well, Hunter, welcome to theshow.
I'm so excited to be here withyou.
We have so many clients,followers of ours around the
(01:40):
country that are raising moneyfor real estate deals, and it's
an art and there's alwayssomething to learn there.
So we're excited to hear howyou pick your brain, understand
how you're conquering the worldand what you're up to.
Speaker 2 (01:56):
So first, welcome, glad to have you.
It's an honor to be on.
Much appreciated.
Speaker 3 (02:01):
Let's just give us a little flavor here of what
you're doing right now outraising capital for a deal,
maybe right now and get us kindof in the conversation.
Speaker 2 (02:11):
So right now we are raising money for a Phoenix
multifamily deal and this isbasically all I do.
We have a basically a 40 mileradius where we buy in Phoenix,
b class, a class apartments inPhoenix B-class, a-class
apartments usually 1980s torecent 2000 builds and, look man
, it's hard to raise money rightnow.
(02:33):
So if you don't have the tipsand the strategy and the tactics
and the technology that we'regoing to talk about today, my
goodness, you might be leftbehind and you're going to miss
this opportunity.
Because 2025, everyone's beentalking about survive until 2025
.
It's here, and the reason theywere talking about that is that
if you can survive until 2025and go all in right now, it's
going to look very different by2027.
So I'm excited to jump in.
Speaker 3 (02:55):
Well, tell me what.
When you say it's hard to raisemoney, what type of money?
What do you mean by that?
Speaker 2 (03:01):
I raise capital from LP investors, accredited
investors, high net worthinvestors, but also from
institutions and family offices,and what's happening now is
that people are still dealingwith the wake of many investors
lost money for the first time in15 years.
Some investors lost money forthe first time ever because the
first deals they invested inwere in the run up post 2008.
(03:24):
And so we went 15 years withoutyou really hearing stories
about people losing money indeals.
And then, all of a sudden,interest rates rose faster than
they've risen in 40 years andall of a sudden you've got
potential for distress in themarketplace and it's difficult
to raise money now compared towhere it was five years ago.
But that's how you know you'rebuying good deals.
That's the nature of what meansto have a distressed
(03:46):
marketplace.
Now, it's not broadly distressed.
It's not that hundreds ofthousands of multifamily
properties all over the countryare distressed.
But when I talk about raisingcapital, that's who it's from
and that's the kind of stuffthat I raise capital for.
But the stuff that we'll kindof get into today about like
attracting leads, nurturing them, converting them, it applies to
any real estate asset class orany non-real estate asset class.
(04:08):
It's basically, you know howcan I get someone who's never
heard of me to fund investments?
And you know, that's the nameof the game.
Speaker 3 (04:17):
Wouldn't you say that , I think 15 years, long time
ago.
Everybody's forgotten.
You know, there was amultiplicity of reasons why
there was a real estate bubbleand the quote unquote crash
Isn't more of the difficulty inraising capital competition.
I don't know if it's themarketplace.
(04:39):
People want deals and interestrates can give us other benefits
Higher interest rates as aninvestor, hedging against
inflation and buying real estateis a great deal.
But I mean, it seems to methere's a lot more people in the
marketplace that's got a fundEverybody, anybody, got a fund,
you know and they're trying toraise capital and I think the
competition for that dollar ismore of an issue.
(05:01):
But you're saying it's maybefear or I mean.
Speaker 2 (05:06):
So I've been in this business for a while, I know you
have as well, and so,essentially, we had an explosion
of the popularity ofnon-institutional investments in
the private sector, meaning506B, 506c funds, single asset
investments, multifamilyself-storage, mobile home parks,
office industrial, you name itright.
(05:27):
20 years ago, outside of, likethe country club circles, there
weren't a lot of people talkingabout investing in syndications
or the common vernaculars likecrowdfunded tools, and so, in
2012, the JOBS Act was ratified,which I believe was actually
opened up in 2013.
And it allowed you to, for thefirst time, to talk about real
(05:48):
estate deals on the internet,and this basically created the
birth of the syndicated slash,crowdfunded popularity that I'm
talking about.
And so, yes, you're right,people got into the space for
the first time.
People heard that you could goand invest in an office
industrial complex in Texas forthe first time.
People heard that you could goand invest in an office
industrial complex in Texas forthe first time, and so you got
(06:09):
all these new investors into thespace, and so, from that
perspective, it is morecompetitive.
However, it's more competitivebecause it's way more popular,
so now you've got way moreaccredited investors that are
knowledgeable about the factthat you can invest in these
deals, credit investors that areknowledgeable about the fact
that you can invest in thesedeals.
So I think the real issue isn'taround how many people are out
there trying to do this.
(06:29):
It's that people are freakingscared.
People are scared and at somepoint the scales will tip from
fear of investing to fear ofmissing out, and so that's why I
said in the introduction I'mhere to start alerting people
that that fear of missing outthing, that scale, is going to
be tipped here in the next 24months and then the deals aren't
(06:52):
going to look nearly like theylook right now.
Speaker 3 (06:54):
Okay, okay, maybe we'll come back to that fear
point.
I want to also put this inperspective.
For so many of our listeners,there's generally three ways to
raise capital.
I can, when it comes to a andthe I word is a swear word, you
know the investor word is a verydirty word.
We got to be careful how we usethat right.
(07:14):
And so I may say I need moneyfor my project, so I'm going to
go get a lender.
So a lender might do a firsttrust deed, I might have a hard
money.
I might have a hard money, Imight have some sort of lend
scenario, but they're not aninvestor, they're a lender.
Different rules.
And then number two I mightjust partner with someone and I
(07:36):
might be able to get to up tothree or four lenders or three
or four partners, maybe five orsix even in an LLC.
Raise capital as a partnership.
We're cool.
We're not in the SEC, purview,securities and Exchange
Commission.
I'm not having to build a fund,I'm not having to build a
syndication.
Heck, I could raise 100 millionwith five guys or 1 million
with five guys, whatever, butI'm partnering.
Then we get this investor lane.
And, by the way, some peoplemay say well, let's partner and
(07:59):
I'll give you some interest anda piece of the equity.
So it's kind of a participatingloan scenario.
But those two lanes.
Initially I take it you're notplaying over there.
You're like nope, we're doingfunds, we're dealing with
investors and, based on the typeof fund, we might not have to
go after accredited investors orwe might have to.
(08:21):
I guess we'll come to that.
But are you doing any lendingor partnering, or is it all kind
of more money raised withinvestors?
Speaker 2 (08:28):
Really good question.
So the important distinctionwhich you're getting to, which
is the third piece, is thiselement of control.
So in your example, whereyou're having a partnership with
five people, or we also call itlike a joint venture agreement,
all those people basically havean equal seat at the table.
All those people basically havean equal seat at the table.
But the SEC views it as amaterial shift when you start to
get to 7, 8, 9, 10 investors,let alone 100, there's no way
(08:53):
100 people can all have anactive role.
At some point you're kind ofdeferring to a third party,
which is one of the criteria ofcreating a security.
So in the world of creatingsecurities, when you have, like,
let's say, a hundred investorsthat are each investing 50 grand
or a hundred grand, you've gotto do this different level of
compliance.
You got to hire a reallyexpensive attorney and you've
(09:13):
got something like an operatingagreement and a private
placement memorandum which isset up to raise money from a lot
of people into, let's say, onedeal or a fund or something like
that.
And so, to answer your questiondirectly, I prefer that
crowdfunded quote syndicatedmodel for real estate, because I
want to buy bigger and betterdeals and maybe you've got a
(09:33):
couple of contacts where I canget four people to invest $30
million a piece.
But because I mostly hang outin the world of accredited
investors investing a hundredgrand, 200 grand, maybe half a
million bucks, it's going totake a lot of investors to buy
this property we're about to buy.
That's going to be $20 millionpurchase where it's about a $7
million capital raise or $10million capital raise.
(09:54):
So when I get into that worldto your point, more legal
structure, information, more SECcompliance, more dollars with
attorneys, but it opens you upto buying institutional quality
assets in great markets thatrequire quite a bit of money to
acquire.
Speaker 3 (10:12):
No, no, absolutely.
And we have clients they say,well, I want a silent partner.
Oh, you want an investor,you're in lane number three.
So for people out there thatare saying, well, I want to
raise a million dollars or $10million or what, what have you?
Um, it's a democracy in apartnership.
(10:33):
Um, if you want to have controlwith, there's still guidelines.
I mean, you got to meet yourwhat you're promising your
investors but, um, I I'm.
This is good.
I wanted to make sure.
We're talking about lane threetoday, and that's what I was
trying to get at is, for ifyou're a listener, you may be
able to raise all the money youneed to and do all the deals you
want with a as with, throughthe lending model or a
(10:55):
partnering model.
But again, as you're goingafter these bigger deals, I
might need more people, moremoney than I.
Go down to the syndicationroute.
What, what reg do you likeright now?
I mean, I guess let me say itthis way too Could you explain
from your perspective, as you goout to raise money, depending
on how you advertise, I'm goingto have to stick to accredited
(11:19):
investors or maybe I can do somenon-accredited, depending on
how I advertise.
Can you explain yourperspective on that and which
within that lane, which one you?
Speaker 2 (11:29):
prefer?
Sure.
So and this is coming fromsomeone just for context for
people that are not familiar soI've raised around a hundred
million dollars from hundreds ofinvestors.
I've done it with every flavorand basically every real estate
and non-real estate transactionthat exists, and I originally
did this as a fund of funds andthen later as a registered
representative under a brokerdealer, and now I do this
(11:50):
exclusively as a general partner, buying deals directly, where I
raise money only for my owndeals.
So I've been through a lot inthis industry and that's not
even a flex, I'm.
Actually I wish I hadn't beenthrough so much.
I wish I had figured out mycurrent lane way earlier, trust
me.
But I work with a lot of greatgroups that have different
perspectives and a lot ofdifferent attorneys, and so
(12:12):
here's my view on all this.
There are regulations that allowyou to raise money from
non-accredited investors, andthe most common one is Reg D
506B, as in boy, and what thismeans is it's an exemption from
going public.
So when Tesla goes to raisemoney, they do so in the public
markets, but if you're going toraise money for a real estate
(12:34):
deal, you don't want to getcrippled by the regulatory
burden of what it means to takea real estate deal public.
I'm not talking about a realestate company.
I'm talking about you'reraising money for a deal, so in
that case you need an exemptionfrom going public, and one of
the most popular exemptions isthat Reg D 506B, as in boy.
It allows you to have up to 35non-accredited investors in the
(12:56):
deal through a syndication, andthe rest have to be accredited,
and the way they verify this isthey basically check a box
saying that they're accreditedBasically means they make more
than $200,000 a year, or$300,000 a year with a spouse,
or have a million-dollar networth minus their primary
residence.
Speaker 3 (13:12):
There's other definitions and I want to
digress there for one minute foreverybody.
I was just going to ask can wedefine that for everybody?
Accredited investor let's justcall them a super investor.
Whatever they have $250,000,have 250 or 300 grand of income
and a million dollars in thebank or per se of equity
somewhere not in their home andpeople raising money out there
are going to want to have aletter from an attorney or a CPA
(13:33):
to verify that so they don'tget in trouble taking money from
someone that really is not asuper investor.
Speaker 2 (13:39):
But I would say one thing cause.
It's important distinction.
With 506B, as in boy, therequirement is that they check a
box that they are accredited.
And the reason I had to jump inthere is that there's a
different regulation 506C, as inCharlie where it's actually
required that all investors areaccredited, but they can't just
(13:59):
check a box to say that they'reaccredited.
They have to have that letterfrom an attorney or a CPA saying
that they're accredited.
So the reason I mentioned thatis that that extra layer of
scrutiny has a benefit.
Yes, they all have to beaccredited, they all have to
have that letter, but then, forthe first time, it allows you to
publicly advertise or generallysolicit for deals.
(14:22):
So with 506B you can't go on apodcast and say I've got a deal
right now, go to asimcapitalcom.
If we're using a 506C, I cansay that, which, by the way, is
one of the reasons why we use506C, because I'm on a podcast
right now.
I don't want to be worriedabout breaking the rules.
So there you go.
Now there's other things we canget into, but those are the
(14:43):
kinds of regulations Most of thepeople that do real estate
deals in our niche those are thetwo regulations they use.
Speaker 3 (14:52):
No, absolutely.
In our office we do Reg B andReg Cs and PPMs and I think we
should tell people too.
You're looking at our officewe're around 25 grand to 30
grand to really build thatsyndication out, and that sounds
like a lot to some people todeal with lawyers.
But I also have people go outand step into a law firm that
wants to charge them 60 or 70grand and it's just highway
(15:12):
robbery in my opinion.
So you got to be careful outthere as you shop for that.
I really want your take onworking with lawyers in this
process, which is probably thebane of your existence.
So I want to make thisdistinction for everybody.
We've got these two options.
You call them public,non-public, and I kind of like
that.
That non-public is I can raisemoney from family and friends,
(15:34):
but I can't post on the web.
I can't say I'm on social mediadoing this.
I can't go on a podcast and sayI'm doing this, but it's a lot
easier from a regulatorystandpoint.
But I can't go publiclyeverybody and go tell them about
it over here I can go oh man, Ican go public all day long,
tell her I'm doing a, la, la, la, la la.
But the only people that caninvest with me are these
accredited investors with averified letter that they are
(15:57):
accredited.
And what you're telling me isyou like option two, so you can
go out to the world and la, la,la la and let everybody know
what you're doing?
Speaker 2 (16:04):
I would just say and this is not legal advice, but
from a business standpoint Ipersonally prefer to work with
accredited investors only, and Ijust think it makes the
business more scalable.
I think accredited investorscan invest more.
They're far more likely toreinvest.
They're far more likely to knowother accredited investors.
Don't misunderstand me.
It doesn't mean that I don'tlike non-accredited investors.
(16:25):
In fact, I very much got intothis industry because I wanted
to help all people get money outof the stock market casino.
But after dealing with trialsand tribulations over the last
decade or so, that's just mypersonal perspective.
So I wish the regulationsweren't written the way they
were.
But because they are, that'sthe way we decide to go.
Speaker 3 (16:43):
I hear you.
I hear you, and a more educatedinvestor actually makes it
easier to do business.
I get that for sure, yes.
So well, now we're to the cruxof the conversation Going out
and attracting accreditedinvestors, finding them, letting
them know.
What you're trying to do and Iknow that's been one of your
(17:07):
main topic of one of your booksand what you talk about a lot is
how to help other real estateinvestors find accredited
investors.
You say a lot of them areafraid right now.
Speaker 2 (17:16):
okay, but maybe your first thoughts on helping people
find these accredited investorsand get them to take action, I
think when I got into this worldof finance and real estate,
it's probably because of thesame reasons that a lot of
people listening to this showget in this world is that we
want to make money for ourselvesand our family.
We want the benefits fromdepreciation and cashflow and
(17:40):
later appreciation and thesetypes of things.
We got in this industry becausewe want to do deals, and what I
have found is that we becomereal estate or private equity
nerds in pursuit of the rightthing, which is focusing on
deals, but what ends uphappening is, when you want to
raise money from, as you said,silent partners, when you want
(18:00):
to raise money from LP investorscall them dentists, doctors,
lawyers, high incomeprofessionals they are not real
estate nerds, they are nerds oftheir profession.
And so what I did is the firsttime I tried to raise money, I
found this perfect deal and gotin a room of 30 accredited
investors.
So think about $30 million innet worth or something like that
(18:20):
and I just presented the crapout of this deal or something
like that.
And I just presented the crapout of this deal 10% cap rates
growing in robust markets.
It's the mobile home parkindustry, where they don't even
own the parks themselves.
You just own basically a lotand the homes are positioned on
the lot.
They basically pay you rent.
It's the best business model ofall time.
The problem is, nobody caredEven though they knew, liked and
(18:44):
trusted me, nobody wasinterested in investing in the
mobile home park business.
They didn't know what a caprate meant, they didn't know
what debt service coverage ratiowas, and so I was finding
myself pitching this deal topeople that were uninterested,
not motivated, not emotionallyready to invest, and I fell flat
on my face.
I raised $0 on my first capitalraise, and so what I've done
(19:07):
over the last, however long, isnever gone through that again.
I built a system for attractingleads, educating them through
things like podcasts, events.
We have an event coming up,there's also my book and stuff.
I'm doing all of this in apursuit of building notoriety
and reputation and gettingattention, which is the top of
(19:29):
what we call the funnel, whichis an inverted triangle, and at
the top you have attention.
Then you convert that attentionto a lead by doing things like
webinars, podcasts, downloadreports, economic updates, excel
models that people can puttheir first name, last name,
email address, phone number inand exchange for that digital
knowledge product, and then Ihave them in my world, and so
(19:53):
that has a lot more to do withraising capital than just
forcing debt service coverageratio down the throat of a
doctor that doesn't know whatthat term means, and so that's
what we do at raisingcapitalcomwe help people build that kind
of system.
Does that make sense?
I know it's not new to you, butfor some people they never
thought they would be in theworld of content creation and
podcasts.
(20:13):
But of course, that's how yougenerate a lot of your business,
and I'm just hoping peoplelistening to this will start
doing the same for theirs.
Speaker 3 (20:19):
Yeah, it's a great point Raising capital.
If you can increase yourcredibility and get them
drinking your Kool-Aid and getthem in your world, it
definitely generates those leadsand helps you close them.
And that's very uncomfortablefor some people and they don't
(20:40):
know that they're better outfinding the deals, they're
better out managing the dealsand they're great in the
presentation room, but theydon't want to be an influencer,
they don't want to be out theretop of funnel.
Are you saying a syndicationreal estate investor should
(21:01):
partner with someone that wantsto play that role, or is there
another way to attract theseinvestors without being an
influencer?
Speaker 2 (21:08):
There's two things I want to touch on, because all of
those are options, but what Iwant to call people out on is
that, if you're the kind ofperson that's obsessed with the
details, right, you're focusedon operations.
You know the market like theback of your hand, you know all
the comps, you know focused onoperations.
You know the market like theback of your hand, you know all
the comps, you know all thecompetitors, you know all the
property managers in the areaand you've got a strategic
(21:29):
advantage.
You owe it to your investors,or potential investors, to rise
to the occasion and do what I'moutlined.
It doesn't have to be me, youcan listen to anybody, but we're
all saying the same thing toraise a bunch of money and to
buy bigger and better deals andmore deals, and to get more
people out of whatever crazyinvestments they're in and into
(21:52):
your predictable cashflow typeof opportunities.
You've got to be able to be alouder version of yourself, and
so the people that cringe themost are the exact people.
I want to do this because theengineers, the scientists, the
people that are sometimescrippled by analysis, paralysis
and also, by the way, impostersyndrome, which is more common
(22:15):
for people that are moreintelligent.
Those are the people that Iactually want to succeed in this
industry, because they willactually be the ones that are
skeptical of doing bad deals.
But what I'm talking about isso powerful that if idiots do it
, they will also raise a bunchof money, but the deals will go
bad, and so that's kind of thereality.
(22:37):
I don't want people to shy awayfrom the fact that you want
more topline revenue, and theway you get that is by raising
capital, and the way yougenerate more top-line is by
sales more scalably, and the waythat you do more scalable sales
is through marketing, which iswhat this conversation is all
(22:58):
about, whether people know it ornot.
Speaker 3 (23:00):
It's about marketing attention and in converting that
attention to dollars 20 yearsago, marketing consisted of
holding a dinner, invitingpeople out or not.
It's about marketing attentionand in converting that attention
to dollars.
20 years ago, marketingconsisted of holding a dinner,
inviting people out having alittle presentation.
Now we've got all theseplatforms and ability to get in
front of people.
Do you ever feel like it's somuch work to do the big deal?
(23:24):
You're like I could just makeas much money with the little
deal, that constant pursuit.
You're like you know what?
It's not worth it.
You could have three guys on adeal and make the same as
managing 40 investors on amassive deal and all the
headaches I prefer, let's say, a$20 million deals.
Speaker 2 (23:43):
But the reason I prefer them is I can't buy $100
million deals yet notconsistently and so I want to be
in quality assets in primemarkets and so, generally
speaking, there's usually somereally good deals in the $40,
$50 million range.
(24:03):
You start to be competing withinstitutions that have lower
cost of capital at that range,so sometimes 20 million is kind
of the perfect little elementthere 20 to 40 million but I
never want to go to 10 becausethe amount of work I have to do
is very similar between a 10million, a 20 million, a $50
million deal.
So that's just my perspective.
I'll give you some other nuancethere, which is that once you
start buying deals that are,let's say, 60 units or less in
(24:27):
multifamily, you don't reallyhave the economics of scale.
Economies of scale to have afull-time property manager on
site.
You also have smaller physicalstructures, so there's not as
much tenant diversification.
So it all makes sense to kindof plant your flag in the ground
at a certain point, but most ofthe time people are planting
their flag in the ground notbecause of anything I just said,
(24:47):
but because they can't raisethe money.
That's the number one limitingfactor in almost every private
equity business that exists isthat they don't have leads
coming in, they don't have asystem for attracting and
educating and nurturing andclosing them, and so they're
stuck playing, going deal todeal, scrambling every single
time they put something undercontract.
And I don're stuck playinggoing deal to deal, scrambling
every single time they putsomething under contract, and I
(25:09):
don't want people to be limitedby that.
I want you to be able to playin the space where you want,
regardless of the money you canmake.
I don't want you to be limitedby capital.
I want you to be limited by thespace and the amount of deal
flow and the economies of themarket.
Speaker 3 (25:26):
I love that and I like how you said that this
conversation really is aboutmarketing for all intents and
purposes.
How do you attract thoseinvestors and, like you said,
bring them into the funnel andnurture them and close them?
I guess what I'm getting at andI'll ask it in another way is
sometimes people shouldn't dothat.
Like you know, just because youcan doesn't mean you should,
(25:48):
and I have some clients that arelike oh, I can't wait to do my
$20 million deal.
I go do you know what you'regoing to be doing for a $20
million deal?
It's very different than a $2million deal.
You're not going to be wearinga tool belt anymore.
You're not going to be doingthis, you're not going to be
doing that.
You're going to be on the phoneand kissing the ass of
investors every day and theemails and dealing with
accountants and getting outreports and dealing with audits
(26:11):
and that.
That is that what you want to bedoing.
Or do you want to be doing adeal?
You want to be on the dirt ordo you want to be behind a
computer screen?
And they're like, well, no, butI want to's big deals, and it's
like, no, you don't and I don'tknow.
I think sometimes people need areality check of this
trajectory.
That really isn't sometimes allit's cracked up to be Dude that
(26:34):
was the story of 2019, 2020,2021, 2022.
Speaker 2 (26:39):
And then, all of a sudden, all this distress takes
place, and it's not widespread,but it's very specific to
multifamily and prime markets,where people use floating rate
debt, and only then can youactually figure out if you want
to be in this industry.
I mean, it's easy when realestate's the number one wealth
creation vehicle in the historyof the country.
(26:59):
It's not as easy when you'vegot people that invested money
and lost money, even if itwasn't on you, even if it wasn't
even in your deal, but you justgot to hear stories about
people that have lost money.
That is a weight that few canand should bear, and so I mean
(27:20):
that, to me, is the kind ofthing like are you actually cut
out for this industry?
Like, because people talk aboutI'm going to go left, when
everyone's looking right, yeah,right, okay, cool.
Why don't we wait and see whatthat actually feels like?
Because what it usually feelslike is that when that actually
happens, when that moment takesplace, people go well, not like
this, this doesn't freakingcount.
(27:40):
This is an insane once ageneration black swan event.
Every single time.
It happens every seven to 10years and I get that and I've
had those thoughts and I've lostsleep over things and I have
done deals that have lost money.
I've done a lot of deals andmost real estate investors that
have done a lot of deals havelost money on deals.
But does it kill me?
Yeah, but I owe it to myinvestors to keep freaking going
(28:05):
, because I know that when itcomes to due diligence and
operations, I mean, we know whatwe're doing, and so I owe it to
overcome those challenges andthat frustration and those
self-doubt feelings to stay whenit matters, because, holy crap,
that's when you can buy thebest deals.
When you're having thosemoments of self stealth, doubt
(28:27):
and you're hearing stories aboutinvestors having lost capital,
that's when you know you'rebuying right, and so that's the
most important part of the wholecycle.
Speaker 3 (28:36):
So what are your biggest challenges in your
process right now for raisingcapital and the deals?
Is it finding deals or findinginvestors?
Two, both are difficult.
Speaker 2 (28:49):
Both are difficult and the emotional element of
both of them.
But I will say that, like youknow, going back to, let's say,
2019, 2020, if we would put outa deal in a prime market in a
asset class that people arefamiliar with, you could fund it
in a matter of hours or minutesin some cases, and what ends up
happening when there'shesitation in the marketplace is
(29:12):
that people start findingreasons not to invest in deals
because the FOMO isn't there.
That's still.
The emotional rollercoasterthat they went on is still
present in their mind, and sowhat ends up happening now is
like this deal that we're aboutto close.
On every metric that you coulduse to determine how risky an
(29:32):
investment is compared to twoyears ago, it's cranked all the
way the other direction, Meaningfixed rate debt, five-year term
, sub-70% loan to value agencyfinancing a business plan where
the property is alreadyrenovated and the seller is
simply selling at a basis that's22% to 25% below where they
would have sold two years ago.
(29:53):
So you're literally justbuying-.
Speaker 3 (29:55):
There's not as many deals.
Yeah, you're looking for dealsand they're not out there.
Speaker 2 (30:01):
That's right.
They're only out there ifthey're forced to sell.
But the challenge is that whenyou present that metric where
all those metrics are crankedthe right direction from my
perspective, investors now arelike wait a minute, this is a
1979 deal, we only want to do1980s or new.
Those are the kinds of thingsthat happen.
Everybody's greedy.
(30:21):
Yeah Well, they're veryhesitant and so good for them.
I wish there was more greed.
What I see now is that thatfear is hey, 1979 is not 1980.
So we're not going to invest inthis deal.
But what ends up happening isthat in a couple of years you
don't hear any questions aboutvintage or agency financing or
(30:41):
fixed rate versus folding rate.
The money just flows through.
That's when it's easy.
That's when you should maybetake a pause.
Speaker 3 (30:47):
All right, I want to throw out what I think is going
on out there and I want you toargue with me or tell me if tell
me I'm wrong and give me alittle bit of background.
I think back from 2016 to 2021,everybody started to go all
right, single family homes,we've done our thing, we're
going to multi-unit, we're goingto commercial, we're going
(31:08):
everybody and their dog.
And there's only so muchinventory.
In the U S, you can go to anymid market major market city.
A lot of investors.
They've got a spreadsheet ofevery apartment building within
10 to 50 million right there ontheir spreadsheet.
Everybody knows what'savailable.
It's not, you know, millions ofhomes.
These are, you know, hundredsof thousands of apartment
(31:28):
buildings.
There's only so much inventory.
So in 2016 to 2021, everybodythat was anybody and the
institutional money startedbuying this crap up, rehabbing
it, creating a cap rate, fixingit, and there's just not as many
deals right now.
No one's like, and.
But meanwhile everybody elsestarted to say, well, I'm going
to get on the bandwagon and I'mgoing to have a fun too.
(31:49):
And so now I got people withmore syndications looking for
deals fewer deals out there thathaven't got an edge with some
sort of intrinsic value that youcan improve on.
You're just buying cap ratesand they're not afraid.
There's just not deals.
I'm competing against privateequity in institutional money
that can write a check, and soit's made the market much more
(32:12):
tight and difficult.
I don't know about fear, but Ithink that's what's going on and
it's okay.
Go buy a cap rate.
That's all you're buying.
You know we got to get.
I don't know your thoughts.
Speaker 2 (32:26):
So some of this is market dependent.
But in Phoenix, for example,deal flow is down like 85% of
multifamily deals.
So that'll tell you a huge partof the story.
But, like I said, every singlemetric that you would use to
determine whether or not youwere buying right, like things
like positive leverage or costper door or things like that
that's all like way morefavorable.
(32:48):
So the idea that someone wouldexcept for interest rates, by
the way, which is, of course,extremely material, but there's
a big caveat to that, which isthat you would much rather buy
in a high interest rateenvironment and sell in a low
interest rate environment thanbuy in a low interest rate
environment, sell in a highinterest rate environment.
So the combination is both arehappening and it's not a
coincidence that both happen atthe same time.
(33:09):
You would only want to sellwhen you're distressed in
today's valuations, so there'sway that's both happen.
Deal flow plummets, valuationsalso plummet, and also investor
confidence and investment rateplummets, despite the fact that
there's plenty of dry powder andplenty of new market
participants and plenty ofpeople sitting on cash.
(33:30):
So this is the nature of themarket cycle, whether or not
it's deal flow or not deal flow.
I mean looking at the dealsthat we're looking at.
A lot of the deals we're doingin Phoenix right now are
off-market transactions.
The last two we closed aretotally off-market.
So there wasn't this massivebidding process.
There wasn't this massive 26offers.
It's just a matter of peopletrying to sell quickly because
(33:51):
they're distressed.
Speaker 3 (33:53):
Okay, so you're out there trying to attract
investors, and you're doing itthrough top of funnel, getting
investors trusting you,believing in you.
So when you have a deal, you'vegot your investor pool ready to
go, and then your book is abouthey, be like me.
And so you're creatingcompetitors for that same dollar
(34:15):
, which is a little surprising.
Why do you do that?
Why, I mean, there's only we.
We just identified the factthat the with interest rates and
the deal flow down 85%.
We've got every Tom, dick andHarry setting up a fund Holy
crap, snoop Dogg has one andthen now you're going to go out
and teach everybody how to dowhat you're doing and compete
(34:37):
with you for that powerful spaceon the web and for book sales.
Is it worth it?
Speaker 2 (34:44):
Yeah, probably not, probably not for book sales, but
there's two pieces of this.
One is really easy to justifyOne.
I freaking love it Honestly,like this is my calling.
In life, I've raised a lot ofmoney.
There's people that have raisedway more money than me, but in
terms of like gettingfulfillment from seeing people
go from no background in privateequity to raising their first
(35:07):
million, or people that havealready raised $300 million and
raising a next hundred millionway easier because of something
I've said, this is like thething that this is the reason
I'm on this podcast right now isI freaking love this game.
You can add a zero or a commain my bank account.
I would still be doing thisexact interview, right?
So you've you've made yourmillions.
Speaker 3 (35:24):
You're like all right , I'm going to teach people how
to do it, even if they takedeals from me.
Speaker 2 (35:28):
Oh don't no, no, no, no, because it's always
self-storming in some way.
The first reason is fulfillment.
The second reason to that,obviously A we can partner with
other people that can raisemoney.
Speaker 3 (35:39):
Oh so you're wanting them to bring you deals.
There's your deal flow piece,baby and capital Right.
Speaker 2 (35:45):
And capital.
So I'll break down this from astructural standpoint.
One of the things I talk aboutfrequently is this concept of a
fund of funds, and soessentially what we do at ASIM
Capital is my private equitycompany.
In every deal we do, we have aspecial class of shares where,
(36:11):
if you invest a half million ormore, you get about 30% more
economics into your entity.
So if you invest half a million, you get an 80-20 split, versus
a typical investor investing100 grand.
That gets a 70-30 split, andwhat this creates is an
opportunity for someone that's adoctor to pull 10 doctors
together that are investing 50grand a piece to invest into our
(36:31):
next deal, and that way I teachpeople how to do this.
They can do it for their owndeals, whatever they can also do
fund to funds for other people,but of course, I'd much rather
them create a fund of funds toinvest in our next deal, and
this is how we raise a lot ofour money, given the success of
the book and our conferences andthings like that.
So that's your answer.
(36:52):
And also, by the way, we have acoaching program, which is you
know, it was scaled from zero to10 million in 31 months.
Those are very self-servingissues and not just based on the
fact that I want to be a goodperson.
Okay, there you go.
Speaker 3 (37:06):
I like it, I like it.
So when's your next conference?
Speaker 2 (37:10):
We have one coming up in Phoenix February 19th
through the 22nd.
It's called Raise Fest.
You can check it out.
Raisefestcom.
It's just about raising money,so not about what a cap rate is,
not about how to find goodmarkets, but basically what
we're talking about today.
Speaker 3 (37:26):
Okay, and that's great, talk to me about your
accounts and lawyers.
What's your challenge there asyou work with professionals?
Speaker 2 (37:38):
It's so integral to the process and when you do
events and all that 100%, andit's a big part of the industry
and it's a big part of why somepeople leave the industry,
because it's a very regulatedand potentially litigious
industry and there's a weightassociated with that.
And what's also interestingabout this industry is that,
because the nature of marketcycles, you can be a market
(37:59):
participant for 10 years and noteven know the regulatory
implications until somethinggoes wrong and, by the way, when
something goes wrong, usually alot of things go wrong and all
of a sudden, this regulatoryburden can collapse these
businesses.
So that's the first thing I'llsay.
However, when I married my wife, we did our vows.
(38:20):
Her vows were really great.
I cried a lot, by the way.
We changed rings and I turn andI see my securities attorney
smiling back at me and I go howmuch money did I give this guy
that he's literally at mywedding?
Speaker 3 (38:37):
And um see how much his fee is for a PPM yeah,
exactly.
Speaker 2 (38:40):
So I mean, he may have ruined my wedding, but I
love him.
By the way, his name is Peterand um, so that should answer
your question right.
Like we have an ongoingrelationship, and it's important
, though, to remember thatattorneys and I think you'll
probably agree with this theirgoal and I a friend of mine
mentioned this metaphor.
I quite like it they'reessentially the referees of the
game.
They're not technically theregulators, but they know the
(39:01):
rules of the game.
If you wanted to learn how toplay the game, though, you
probably wouldn't go to areferee.
You probably want to go tosomeone who's actually playing
the game.
Some do both, but you get mypoint.
You don't want to go to anattorney and be like hey, how do
I raise money?
You want to go to an attorneywhen you're like this is the
deal I'm trying to do, this isthe structure I want to use,
(39:22):
this is what the waterfall isgoing to be, and it's buttoned
up.
And, by the way, attorneys willagree with me, because they
don't want to be consultants inthis capacity.
They'll burn themselves out ofa client running through legal
fees.
So you want to go superbuttoned up after you actually
have, like, a marketing deck.
That's a good time to go to anattorney, because they can
basically use that to craft yourlegal documents.
And how much have I paid?
(39:43):
I paid as little as 10 grand.
I've also paid as much as$80,000 for one deal.
So you know and you, by the way, generally speaking, you get
what you pay for.
So the numbers you were talkingabout before they don't scream
red flag to me, it screams.
You probably know what you'refreaking doing.
It's just an expensive thing todo, since 2008.
Speaker 3 (40:04):
As you know, our directed IRA fastest growing
self-directed company in thespace 2 billion this year.
Do you see a lot ofself-directed money in your
(40:24):
deals?
Do you like that?
I don't even know.
We're probably at your eventwith a table, I don't know.
But anyway, do you like thatself-directed model for your
projects?
Speaker 2 (40:34):
Absolutely, and this is a massive opportunity.
So it's a good tie into what wewere talking about before,
which is that most people don'tknow that this is possible, and
that's the reason you'reexperiencing.
Look, you're crushing yourcompetitors.
That's amazing, but there'salso a massive tailwind to the
industry because people are nowfiguring out that they can
self-direct their accounts, andso the likelihood that you've
(40:55):
got people that are in yourworld that don't know this is
high, so you can lead them tothis truth and then what you
know, help them self-directtheir capital and they can
invest in your deal.
Now, there are some stipulationsaround this, which is not news
to you, but like, for example,you don't want to have more than
25% of the money invested inyour deal to be ERISA funds or
(41:16):
these tax advantage accountsthat can trigger all sorts of
regulations, but other than that, it's a pretty good opportunity
to raise an extra dollar hereor there quite a lot of money,
by the way through these typesof accounts.
And also, if you're the personthat exposes someone and
educates them on the fact thatthey can take, like old 401k
(41:36):
capital from a job they nolonger work at and convert that
to a self-directed account,there's going to be emotional
buy-in there.
That's going to last way morethan just the 100k they may
invest with your deal.
So that's my perspective, Imean.
I'd like to hear yours, though,as well well in one sentence.
Speaker 3 (41:52):
When you go out to those quote, unquote, five
doctors or dentists or whoeverexecutive and you say, hey,
that's raised 500 grand.
Um, it's a lot easier for themto go get five buddies that have
a hundred grand sitting in anold IRA or 401k than 500 grand
cash in a bank account or abrokerage account where they got
to go look at their buddy theygolf with and take it out of
(42:12):
stock.
So the retirement accounts canbe so much more accessible and
easy to raise capital with, inour opinion, and the tax
benefits just are crazy.
So fun, all true.
Well, where do people get moreinformation about you, your
event and tap into some of thistraining you're doing for people
(42:35):
raising cap?
Speaker 2 (42:36):
There's a bunch of great content at
raisingcapitalcom that's ourcompany name.
Just go there.
But this event is going to beinsane.
Raisefestcom I'm going to bespeaking there, pace Morby is
going to be speaking there, codySperber is going to be speaking
there, ken McElroy is going tobe speaking.
I mean, what do you want, right?
Some of the best in thebusiness and also some people
that have raised their firsthalf a million dollars and it's
(42:59):
like, well, how did they unlockthat Right?
So, no matter where you are,there's going to be an
opportunity to learn, and one ofthe reasons I do the event is
that I want to freaking learn.
I want to stay ahead of thecurve as well.
So that's how I get my playbookfor 2025.
And hopefully I'll see youthere.
Just check it out atraisefestcom Love it.
Speaker 3 (43:17):
Well, hunter, thanks again for being with us.
Love it.
Thanks so much, so much goodinfo, and we truly wish you the
best, and thanks for sharingthese insights with our
followers.
So onward and upward, good luck, and the way that you do more
scalable sales is throughmarketing.
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