June 7, 2017
Joe Fairless

4 Skillsets Needed Prior to Raising Private Money for Apartment Deals

Want to become a multifamily syndicator but lack the commercial real estate experience? No problem!

When I bought my first apartment, a 168-unit building in Cincinnati, my previous real estate experience only included four single family rentals.

How did I make the jump from four units to 168? I cultivated the following four skillsets.

#1 – Trustworthiness

First and foremost, people need to already recognize you as a trustworthy person. If you can’t look yourself in the mirror and say “yeah of course people find me trustworthy,” then forget about raising private money. Why would someone entrust you will thousands of dollars of their own capital if you have a history of untrustworthiness?

#2 – Proven Track Record

Assuming you are already trustworthy, you will need a proven track record. However, this track record doesn’t necessarily have to be real estate related. Having prior real estate experience, whether it’s wholesaling, fix-and-flipping, etc., is a plus but not a requirement. If you don’t have real estate experience, then you must have a proven track record in a professional career.

Now, if you just graduated college, have no real estate experience, and have been working in a corporate job for a few years, you will not be set up for success. Examples of a proven track record in a professional career would be if you had entrepreneurial experiences in college, you bought and sold a company, you started your own company, or you’ve held high-level responsibilities at a corporate job. For example, I was a VP of a New York marketing company prior to raising money for my first syndication deal.

Experiences like that would be compelling to private money investors. It shows that you have the business foundation required to handle managing other people’s money.

Ideally, you would have a combination of the two, but either or would suffice.

#3 – Resourcefulness

Another skillset is being incredibly resourceful.

I believe I am the most resourceful people on the face of this earth. I will find a way to make things happen. I will talk to enough people. I will do whatever it takes. That is a core, guiding belief of mine. And let me tell you, making the leap from single-family residences to a 168-unit required a lot of resourcefulness.

I believe we have to be resourceful as multifamily syndicators because challenges will come up and there’s not necessarily a roadmap for how to complete a deal from start to finish. Therefore, resourcefulness is a must.

#4 – Understand the Numbers and Terms

Finally, you’ve got to know how to run the numbers and understand how to analyze deals. You don’t need to have 10 or more years of experience analyzing deals because you can partner with someone, like I did, who has that experience. However, you still need to have a basic understanding of how the numbers work and of the multifamily lingo. The last thing you want to have happen is speak with a private money investor who asks drops terms like gross rent multipliers or internal rate of returns and you have no clue what they is talking about.

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Disclaimer: The views and opinions expressed in this blog post are provided for informational purposes only, and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action.

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