How to Raise Capital for Multi Family Real Estate Deals

When Michael Blank moved into multi family real estate investments in 2011, his biggest problem was capital.

A lot of his money was tied up in restaurants, which were quickly decreasing in value.

He started raising money for deals, and a lightbulb went off when his first investor said they’re in.

Educating yourself on what the process looks like and how to structure deals is really important, Michael explains in this episode of the Capital Gains podcast. Michael also says that you have to be more intentional with your relationships.

As you interact with people, talk about your life but also share enthusiasm for what you’re currently doing. When someone shows more interest in a deal you’re working on, ask if they’re interested in investing.

Slowly move them along with every conversation until you get a verbal commitment from them. Give them an education on the deal and the process. Keep the conversation and relationship going before, during and after that deal is done.

Managing real estate deals to make them scalable

Michael says he doesn’t like to have more than ten investors in a single deal as it’s a lot of work.

Keeping the investor number low makes the project more scalable, and if you educate them and get them comfortable with your team early on it makes the process much smoother.

Finding people for passive deals is all about trust, competency, and honesty. If you want investors to invest in your deal, and you want to make that deal a success, work these things out quickly.

The best investor to have in a deal is someone who has experienced losing money. You want to know how they will react if a deal goes sideways, and if they’ll still be communicating should it happen.

Why multi-family is a low risk, high-value asset class

Multi-family properties are easy to scale and can generate a big passive income.

Once a property has been bought, a property manager can be put in place to fix any problems, rents can be raised, and vacancy issues can be addressed.

When the property is thriving, you can revalue is and pay back the investors. They will want their money invested in another deal.

This asset class is a value-add investment, so brings in cash flow and also improves net worth of the investor. They create a twofold return.

Get coaching for your first multi-family deal

Michael has a team dedicated to helping investors do their first deal. Once an accredited or sophisticated investor finds a good deal, they’ll do the rest of the work and raise the money for it.

He offers training for people to become sophisticated investors with the knowledge of what they’re getting into. The coaching programme also gives an investor access to analyzer tools and a team who will work with them.

If you don’t have a chunk of cash in the bank to invest into a multi-family property, you can use your IRA.

This is completely legal. You send letters to get your money moved so you never see it, and the distribution cheque is made out to your IRA account when the asset is sold. This means tax benefits for you.

Multi-family homes are an exciting financial vehicle with returns of 10-15% a year with limited risk.