How I raised $5M in less than two days without skipping a beat

It was a brisk Saturday morning, and the weather was sunny and inviting. Lots of my friends planned to enjoy some fun activities outside, but this was not the case for me. Instead, my Saturday was dedicated to preparing an investor presentation for what I anticipated to be one of the strongest syndication deals of the year.

I knew that this was already one of those rare opportunities that can turn a capital raise into magic. The chain of events that followed proved me to be right.

This project was a typical multifamily value add in a B+ location with a B- asset that can be easily upgraded to be B+ or A- type of asset. The deal was anticipated to last approximately five years. It offered an IRR in the high teens, which was slightly higher than typical projects of this caliber that year, and it also presented a bit over 2X of an equity multiple. Just to clarify – an equity multiple of 2X entails that for every $100k in principal, investors could potentially expect back $200k upon the property sale (including the principal), as well as about 2X in losses through depreciation (which means that that this deal carried a tax advantage since $200k worth of losses through accelerated depreciation could be written off in year one).

These numbers made this project an attractive deal, but what made it particularly enticing was that it had a great partner-operator team. The General Partner was one of the strongest operators in the area with an impeccable track record that spanned over a decade. He headed an experienced professional vertically integrated team that included property management and construction management companies. This operator was so thorough that he even anticipated upcoming supply chain issues before most people had an inkling that their lives were about to be affected by breakdowns in the supply chain. For example, he planned ahead by buying construction materials and appliances ahead of time, which saved a fortune on rehab costs and time.

This was a truly strong opportunity, so once we prepared the marketing slide deck presentation for this deal and recorded our webinar, I crafted my marketing email to prospective investors to kick off a $5M raise.

I relayed all the facts and benefits in the email to enable our investors to make an educated decision.

My email included the following information:

Facts about the area, such as proximity to a major hospital, the names of a couple of other large employers in the education and healthcare industries, and easy access to highways from the property
The asset’s potential
The risks that may hinder this investment and risk mitigation planning
Pros and cons of investing in this particular property
A typical profile of investor that would benefit most from this investment
Tax advantages that this project offered
The proposed project timeline
The link to the pre-recorded webinar covering this investment
The uniqueness of this specific investment due to the combination of the aforementioned facts as well as the potential returns

My email closed out with my contact information and encouragement to people to reach out with any questions before making their decision on this investment.

Since the timeline to raise funds was very short on this project, I also highly encouraged prospective investors to request the project Private Placement Memorandum (PPM) since many of their questions would likely be answered in the PPM. I always strive to provide investors the details to make an informed decision, and I am ready to answer any additional questions and inquiries regarding the investment and next steps.

I am a “measure twice and cut once type of person”, so when I was satisfied with my email, I re-reviewed it one more time just to be sure that I hadn’t missed anything. I find that investors respond more often to emails that show up in their inboxes early in the morning, so I set my email to go out at 6:00AM EST next day.

When I checked my email the next morning, I was astounded by the avalanche of responses via email, text, and phone calls to either request a spot in the project, or to speak with me. This trend continued for the next three or so days. So literally in less than two days I raised the entirety of the $5 million needed for this project and put the remaining prospective investors on the waitlist.

I want to reiterate the crucial importance of the waitlist. In fact, my rule of thumb is to have at least an additional 25% of the capital on standby because investors that commit may not be able to follow through on their commitment.

However, it’s understandable that investors may not quite appreciate that they had missed to invest in a particular project because it was oversubscribed super-fast. In these types of situations, I provide the waitlisted investors some sort of incentive when I have a similar project next time, such as giving them the first right of refusal to invest ahead of anyone else. And of course, I make sure to follow through on my commitment.

In summary, I was extremely pleased with the results of this capital raise. I knew that this success was the result of years of hard work, building strong partner teams, and most importantly establishing strong rapport with my inventors-partners to the point where I know ahead of time of how they would react to my communications.

How about you – how do you solve your investors’ questions and issues? How are you helping them to build wealth for generations to come and leave their legacy?