Raising Private Capital: Building Your Real Estate Empire Using Other People's Money

by Matt Faircloth

Overview

Raise more money (other people's money!) for your next real estate deal with the practical tips and techniques in this book.

Are you ready to help other investors build their wealth while you build your real estate empire? The roadmap outlined in this book helps investors looking to inject more private capital into their business—the most effective strategy for growth! Author and real estate investor Matt Faircloth explains how to develop long-term wealth, as learned from his own valuable lessons and experiences in real estate. Get the truth behind the wins and losses from someone who has experienced it all.

Whether you’re a new or seasoned real estate investor, you’ll discover new ideas and fresh motivation while learning a detailed strategy to acquire, secure, and protect private money in your first—or next—real estate deal.

Inside, you’ll discover:

Private money partners in places you didn’t know existed  

The prerequisites needed to start raising money

How to structure debt and equity deals and when to use each strategy

The best way to provide win-win deals to all money partners

How to protect all parties involved in a private money transaction  

Proper private equity exit strategies

And so much more!

Product Details

ISBN-13:	9781947200043
Publisher:	BiggerPockets Publishing
Publication date:	08/09/2018
Sold by:	Barnes & Noble
Format:	eBook
Sales rank:	616,842
File size:	2 MB

About the Author

Matt Faircloth is the co-founder and president of the DeRosa Group, a real estate investment company that specializes in buying and renovating residential and commercial properties. Matt and his wife, Liz, started investing in real estate in 2004 with a $30,000 loan. They founded DeRosa Group in 2005 and have since grown the company to managing more than 370 units throughout the east coast. DeRosa has completed more than $30M in real estate transactions involving private capital—including fix-and-flips, single-family home rentals, mixed-use buildings, apartment buildings, office buildings, and tax lien investments. He is the author of Raising Private Capital, has been featured on the BiggerPockets Podcast, and regularly contributes to BiggerPockets’ educational webinars. Matt, Liz, and their two adorable kids currently live in New Hope, PA.

Table of Contents

Table of Contents

Foreword by Joe Fairless

Introduction

 

Chapter 1 – Introduction to Private Capital

 

Unique Factors of Private Capital

Introduction to the Deal Provider

Introduction to the Cash Provider

Private Capital Uses

Sources of Private Capital

Final Thoughts

 

Chapter 2 – Prerequisites Before You Start Raising Money

 

Why Can’t I Start Raising Money Now?

Prerequisite No. 1 – Get Educated

Prerequisite No. 2 – Develop a Track Record

Prerequisite No. 3 – Take a Personal Inventory

Prerequisite No. 4 – Create a Business Plan

 

Chapter 3 – The Deal Provider

 

Systems – The Key to Success

Working from the Inside Out

Getting Your Name Known

The Deal Provider’s Investment Vehicles

Keys to Success

 

Chapter 4 – The Cash Provider

 

What Makes a Cash Provider a Good Fit?

Why Do They Need You?

Cash Source Part I: The Self-Directed IRA

Cash Source Part II: Real Estate Equity

Cash Source Part III: Cash

Final Thoughts on Cash Providers

 

Chapter 5 – Where to Find Cash Providers

 

Introduction to the Cash Provider Pyramid

Tier 1 – Core Group

Tier 2 – Referrals

Tier 3 – Taking It Public

Final Thoughts on Where to Find Cash Providers

 

Chapter 6 – How to Turn Potential into Reality

 

Fear of Asking for Money

Your Personality – The Good, the Bad, and the Ugly

The Cash Provider Enrollment Process

The Most Common Cash Provider Questions

Follow-up – Where Most Deal Providers Fall Off

Final Thoughts on Turning Potential into Reality

 

Chapter 7 – How to Structure the Private Loan Deal

 

Deciding on the Terms of the Loan

Private Loan Pitfalls

Documents for Setting Up a Private Loan

The Beginning and the End – Two Days That Matter Most

Final Thoughts on Private Loans

 

Chapter 8 – How to Structure Private Equity Deals

 

Revisiting the BRRRR Strategy

Reasons That Deal Providers Should Consider Equity

Which Cash Providers Are Right for Equity Deals?

Equity Investment Vehicles

Setting Up the Equity Structure

The Operating Agreement

Staying in Compliance with the SEC

Common Mistakes Made on Equity Deals

Final Thoughts on Structuring Equity Deals

 

Chapter 9 – Management, Exiting, and Beyond

 

Investor Relations Plan

Exit Strategies

Beyond the Deal

Final Thoughts

 

What People are Saying About This

From the Publisher

“As someone who has raised well over $100M of capital from private investors, credit funds, insurance companies and venture capitalists, I thought I knew just about all there was to know about raising capital. After reading Matt's book, I realized that there is always so much more to learn! Whether you're just getting started or an experienced investor, this book will open your eyes to so many creative ways to raise capital.”

—Matt Rodak, Founder and CEO of Fund That Flip, Inc.

“When it comes to raising money, this book covers everything a real estate investor will need to know while pointing out potential pitfalls and highlighting helpful personal stories that make the content relatable in a real-life context. If you own a business that needs capital, this book will give you the confidence and blueprint you need to elevate your business.”

—Justin Fraser, 88 Real Estate Capital

“Raising Private Capital is a must-read for any real estate investor that is looking to take their game to the next level. Matt is as genuine as they come as both a person and investor—the real-life stories are great life lessons for investors of all stages. I just wish this book existed before we raised our first private money!”

—Chad Gallagher, Owner of SlateHouse Group Property Management and Investments

Interviews

This book will be full of stories from Matt’s personal experience from his 13 years of experience in real estate investing. He has borrowed and lent money, completed fix and flips, bought apartment buildings, executed the Buy – Renovate - Rent – Refinance – Repeat (BRRRR) method. You name it, he has done it. He has made plenty of money using private capital and I’ve made plenty of mistakes along the way. This book won’t pull any punches. It will be light and funny when it needs to be and serious when appropriate. Most of all, the main goal of this book is to inspire and educate readers to use the material in this book to successfully raise private money so that they can build their real estate investing business and achieve their financial goals.

Editorial Reviews

"A concise but comprehensive introduction to finding private capital for real estate investment...A valuable tool for the aspiring real estate tycoon." —Kirkus Reviews

From the Publisher

2018-07-13

A concise but comprehensive introduction to finding private capital for real estate investment.

Private capital—money not raised from a bank or financial institution but a private individual—can be far more attractive than its alternatives. The terms of such a loan are likely to be more elastic and susceptible to negotiated revision and therefore easier to customize. Also, a more direct, intimate connection between what debut author Faircloth calls the "Cash Provider" and the "Deal Provider" leads to a more symbiotic relationship between their goals; as the author emphasizes repeatedly, the arrangement between the two ideally is a "win-win" proposition. In this impressively accessible introduction to a complex subject, Faircloth covers every aspect of private funding, presuming little knowledge on the part of the reader, even including a basic understanding of what counts as private capital. He outlines the different types of loans and the various real estate deals for which they can be used, including the ways these deals can be differently structured. Much of this practical instruction manual is devoted to laying bare the technically esoteric—how to unlock the value of private equity, the benefits of self-directed IRAs as a source of funding, or how to successfully find and execute a fix-and-flip. Faircloth also discusses the more human element of sourcing funds to expand a real estate business: the moral obligations one owes to a cash provider, how to build trust in others through constant self-improvement, and the benefits of mentorship. This is a notably thorough synopsis of the subject, specifically addressed to the beginner—the author even provides a prefatory primer on basic accounting and financial terminology. Faircloth is appropriately conservative in his advice, cautioning the reader to make careful preparations—he explains in detail how—before even attempting to strike a first deal. His counsel is not only clear and expert, but also admirably sober. "While some people get lucky out of the gate, this is not a ‘make millions in a month or two and then move to Tahiti' kind of business."

A valuable tool for the aspiring real estate tycoon.

Kirkus Reviews