Masterclass with Marcin Drozdz

All right, we are live for this special uh installing a capital raising system uh into your business master class. So, I’m super excited uh to have you guys here. We got a whole bunch of people logging in uh Instagram, Facebook, YouTube, all that stuff. And today, I’m actually going to be spending a fair bit of time here. I’ve spent a lot of time prepping for this. We’re going to cut through a lot of the fluff uh and talk about something most people really never figure out until it’s too late. And that’s how to actually build a real capital raising system inside of your business. So, this isn’t like a how to raise money training. There’s a lot of people doing that kind of stuff and that’s that’s great, but ultimately you’re not going to rise to your ambition. You’re going to fall to your system. So, uh, what I want to talk to you guys about here today and and walk you through it is a repeatable, scalable process that actually brings the right investors to you and actually gets the capital in the door before the deal actually hits your desk. Now, again, this is uh capital raising is a regulated activity. So, make sure you have the right advice, you have the right lawyers, you have the right people. Um, I’m going on the premise that you guys are following the rules, PPMs, 506c, all that stuff. But and if you don’t know what that stuff is, we we can talk about it later. But um why this is why this is such a timely training I think is because most people that consider themselves capital raisers, whether you’re a fund manager uh operator or a founder, most of you guys are actually doing this capital raising thing backwards. And and what ends up happening is you end up spending uh a lot of time scrambling for the cash uh when you have the deal locked up. And you know, you’re relying on maybe five or 10 investors to say yes and yes every time. and you’re still probably doing everything manually, which means you end up burning out and you end up thinking that capital raising is hard and all this stuff. So anyway, this this master class, this training is to get you guys out of that cycle. And uh for context, if if you guys don’t know me, I’ve raised multiple nine figures in private capital. And uh let’s go back in time. Uh back in ‘ 08, uh we my team and I we actually ended up raising over $300 million for MC companies alone. uh and and if you remember 080910 what had happened well the world broke uh the financial systems collapsed and uh we raised multiple nine figures during that period alone so I’m sharing that with you is because that’s when I actually started in this industry and for those of you who are maybe thinking that capital raising is hard now um yeah I mean compared to two years ago sure but two years ago you didn’t have to raise money you could make a post on Facebook and Instagram and people would throw money at you. So the actual skill of raising capital is most profitable and most necessary right now and again uh for context I started back in 0809 and you know we’ve we’ve scaled and worked with multiple businesses across the country uh US and Canada actually and we’ve had clients raise anywhere between a million three million uh we had one client raise over 9.4 million pard me 9.6 six million over a sing single weekend. So without begging, chasing or burning relationships. So today what I’m going to do, I’ve got about 45 minutes here, then I’ll leave some time at the end for some questions. So we’ve had a whole bunch of you send in questions to us. Uh by the way, uh we have a free community called Capital Connectors on School. If you guys are interested, welcome to join it. It’s S K. And um yeah, we’ve got uh we don’t we don’t sell courses. We don’t sell any of the stuff. my content, my stuff is there. If if you want my master course on how to raise capital, it’s there. It’s free. It’s it’s available to you. Um and and today, what I’m going to do is I’m going to walk you guys through what I call the core four, which are the four pillars every capital raiser literally needs to stop relying on luck and actually start building a business that scales. So, part one is going to be about packaging yourself and your offer. So, creating an environment where investors want to say yes to you before they actually even see the deal. Two is building a system that builds qualified investor leads to you. Three is running investor meetings that actually close capital so you don’t you don’t end up becoming what I call a professional visitor where you just visit with people and you never get any commitments. And four is installing a capital uh a back-end system for your capital raising that allows you to scale uh without things breaking uh too too much. This this ends up being your bottleneck most of the time uh once you actually start having some success. Now, one last caveat here, guys. This isn’t a theory based conversation. This is literally what’s working right now in our business and in the businesses that we consult on. We have we’ve had over a thousand people that we’ve businesses that we’ve consulted on uh 400 plus active capital raisers, fund managers, operators in our communities. So, I have a pretty good idea of of what’s working in the market today. Now, the other thing I want to share with you guys is this is about principles and systems and strategies that make this all predictable and scalable. And if you’re watching this and thinking, I already know some of this, good. Now, ask yourself, have you actually implemented it? And if you have, is it repeatable? And is it working without you actually having to grind all day? Because knowing what to do and having the system installed are two very different things. So, I just want to make that crystal clear. So, if if while you’re watching this, you’re like, “Okay, I’m missing this or I’m missing this and you you’re stuck in the weeds trying to piece things together, here’s the deal. At the end of the training that I’m going to give you guys here, I’ll give you guys a link where you can book a call with my team. It’s not a sales pitch. It’s meant to be a working session where you and my team can actually map out what your capital raising system could look like versus what it is. And worst case scenario, you’ve got more clarity in a plan. best case scenario, we’ll figure out if we can actually help you and, you know, work with you to install a system legally, compliantly, and with confidence. So, no pressure, no fluff, just the truth about what it takes and whether you’re a fit for us and whether you’re a fit for whether we’re a fit for you. So, with that, with that in mind, I’m going to get started here, guys. And part one, like I said, by the way, if you have questions, go ahead and put them in the chat. I’ll try to get to as many of them uh at the end. I already see a huge list of questions so I’m just going to jump into it here. So part one is packaging you and your offer. So this is where positioning your unfair advantage so investors say you say yes to you before they even see the deal. So for context in 0809 and 10 when we were raising capital for MC companies in Ken Macroy I can tell you back then confidence excuse me in the market very very low yet we were able to raise multiple nine figures in a very short period of time in was it two or two and a half years. So how do we do this? Well first of all you got to keep in mind that you are the product before there is a project. So in other words investors invest in people first. deals are the justification or almost like the manifestation of why working with that person is a good idea. So, some tactical things for you to think about here are when you look at how you’re currently positioned, are you leading with the deal or are you leading with you and your story? Most of you, 90 some odd percent of you are probably leading with, hey, here’s this deal and here’s why it’s a good investment. I’m going to talk about why I think that’s backwards in a little bit, but I can tell you what’s worked for me and my clients over the last 20 years is when you lead with personal authority and you position them on a personal basis in terms of why this individual or this group of people are credible. So, a really tactical way for you to implement implement this into your business today is literally have a two-minute elevator pitch that walks people through who you are, what you do, why it matters, and why. Now, if you can just follow that framework again, who you are, what you do, why it matters, why now, and then that messaging, you can literally roll that into what I call a founders welcome video onto your landing page or in your data room. So, as an example, if I was positioning myself, well, actually, you’ll see this in my next fund coming up in the fall is for context, I started this business back in 2008. when the whole world blew up, that’s when I learned capital raising, deal structuring, asset management, all of this stuff during the hardest time in the economy. So, having raised multiple nine figures, my team and I having done over $3 billion in deals, I would build that into my founders welcome message in terms of who I am, what I’ve done, and why that matters in the context of what’s going on and why now. So, why the market today, what’s happening, what’s going on, where the opportunities are, things like this. And what’s interesting is if you nail this, and listen, whether you’re, you know, first deal, second deal, whatever it is, there’s ways to to pull all this together with your credibility or other people’s credibility to really make it stick. Part two to uh your unfair advantage is the actual unfair advantage formula. So uh I define this as your story multiplied by your why within brackets and then multiplied exponentially by the proof or evidence that that is real. So what what does that mean? So your story is if you think about your life as a movie, like if you had to plan it out in a series of like major pivotal moments or scenes that really shaped who you are in terms of how you see the world, how you treat other people, how how you how you see just how you see life is a function of maybe a half a dozen or a dozen core memories if you really wanted to sum it down to that. So what are those anchors in your life? Your proof is as a result of your story, what are the things that you’re most passionate about? What are the wrongs that you want to write in the world? What are the things that you almost don’t care about? What are the things that you prioritize? What are your values? Ties into your why. And then proof or evidence is either proof of effort or proof of results. So, in other words, what have you done that then uh really compounds the the fact that these things are true? So, for example, uh my story to give you guys some context, I was born in a communist country. We escaped Poland into Germany and eventually made our way to North America. And I grew up in an environment where plan A had to work. There was never a plan B. It was inconceivable that plan B there was a plan B because you just worked plan A until things worked. Um, a big part of my growing up was So, there you go. I’ve given you a little bit of my story, a little bit of my why. Proof. Well, in my early 20s, I didn’t have any proof of results. So, all I had was proof of effort. So, I would uh work for free for real estate agents. I’d put up for sales signs. I’d hang out with mortgage brokers. I’d spend hundreds of hours and thousands or tens of thousands of dollars learning this business when I had nothing else to offer other than whatever cash I could throw into a program and just sheer willpower and time and effort. Now, 20 years later, multiple nine figures raise, you guys are starting to understand it. So you have your story, your why, and the proof of effort or proof of results. Obviously, if you’re earlier, you have more effort than results. If you’re starting to gr get a little gray hair, you have more proof obviously there. Now, some tactical ways for you to start implementing this on your own is literally story. Film a short origin story of yourself and post it on your LinkedIn. Take your why, explain why you’re in the business that you’re in beyond making money. So, for me, I’ve always loved the BC apartment space because guess what? When we first came into this country, guess where we lived? BC apartments. And I hated certain little things that were inconsistent like the security, the access control, things like that. For me, when I when I had the ability to invest in real estate and provide for real estate, I always preferred to be able to provide that type of housing because I knew the pain of not having a safe place to live as a kid as an example, right? And then finally, for proof, share deal stats, testimonials, and obviously lived experiences. So you guys you guys can really put this piece together. And when you think about it from another way is really credibility isn’t it is isn’t doesn’t equal your credentials. And what I mean what I mean by that is just because you went to a certain school or you have a certain degree or you’ve put in a certain hours that’s not that’s not an entire story. What is more important than credentials is credibility. So, I can tell you right now, if you walk up with your fancy degree from a school or whatever it is, versus I don’t know who you are, but you’re talking to somebody who I know, respect, like, and trust, and that person says, “Hey, you know that Marson guy? He’s pretty good.” Cool. I will value that opinion over the the the credentials. So, I’m not saying you don’t get the credentials, but credentials on their own are not nearly as valuable as other people giving you the credibility. So using third-party uh uh demonstrations where you you’re you’re you’re part of communities, part of groups. That’s literally why I went to work with MC Companies in my early 20s because I wanted the exposure. I wanted to learn the business the right way right out of the gate. Um and and there’s there’s by the way, if you guys want more examples of this, go into the Capital Connectors community because you’re going to be able to see that. So I’m going to move on to the second piece because I kind of beat that one up here. Um the so the first first piece again is packaging you and your offer. The second piece is once you nail that packaging and that messaging of you yourself your unfair advantage what’ll end up happening is two things. Number one by you positioning yourself in a very specific way. What’ll end up happening is a certain type of person will then appeal to will then gravitate towards you because they’ll relate to your story. They’ll relate to your upbringing. They’ll see themselves in you and because of that they’re going to see see you as someone credible and trustworthy or at a minimum somebody worth listening to or somebody that has a level of influence that they’re obviously looking to participate in. So that’s that that’s part one. Then you have your unfair advantage package. The second thing is then taking that unfair advantage and building out your actual lead generation system. So I can tell you for for most of you in real estate, this is where you well you have two major hang-ups. One is you don’t package yourselves, you package the deal. But even if you’ve packaged yourself correctly, your lead generation system is you. It’s it’s you. You are the lead generation, which means that you end up having to go out there and constantly outbound people, cold call, networking events, and you end up becoming the hunter. And I best best quote I’ve ever heard in private equity is if you chase money, it will run from you. So the goal in capital raising isn’t to go and sell and promote and and and and and do all this stuff. It’s to it’s to be a magnet, not an actual hunter. So how do you do that? Well, you start creating things of value to the ideal person you want to talk to. So who is that? Well, if you’re unfair advantage was rooted in your profession or in your upbringing or maybe in in in in the hard things that you’ve done over the course of your life that are now relatable. you can then take those things and create those into lead magnets. So, as an example, I’ll give you a practical example. One of our clients uh immigrated from uh the Ukraine, I believe it was. He was uh he had an he obviously left years ago, even before the the recent war, but him and his wife left. They ended up becoming GPS uh doctors in uh in the US. And now they’ve decided that a couple years ago they decided that they weren’t able to obviously create the kind of income that they wanted just by being doctors because you’re you’re you’ve got cash but you have no time. So what they ended up doing is started to invest in uh real estate. They did it passively initially. They got themselves it some deals did well some deals got them into hot water. So they started creating a lead magnet. Um I forget the name but one of it is five hidden truths about passive investing. So for example, because of their experience having made money and lost money and from the context of who they are, that gives them credibility in the marketplace. So literally, you guys can do this whether you’re teachers, whether you you worked in uh uh whether you’re a tradesman, a construction worker, real estate agent, whatever it is, you can literally start with your LinkedIn. Like go on your LinkedIn, most of you have a LinkedIn, and literally start posting content that is valuable. You can literally post your origin story that I told you about earlier. You can start posting some content, some perspectives on what’s going on in the market from your unique vantage point. And you could literally just begin to create some really soft CTAs to have people connect with you uh through that model. There there’s there’s dozen ways to do it. Now, the framework that you want to think about this within is called audience action access and action. So, in other words, you want to know who you’re talking to, um, where they’re at in their in their journey and how they respond. So an example of this of an audience for example obviously you guys are hopefully if you’re doing 506c and you have the ability to market chances are you’re going after accredited investors and maybe there’s a sub sector where you prefer to deal with dentists, doctors, tech founders, uh chief technology officers, hide play W2s, maybe you prefer just pure entrepreneurs, other people like yourself that have started businesses. Maybe you’ve built a business. Maybe you’ve sold a business. Maybe you spent your entire life working in the corporate space and and those are the people that you resonate with the most. So that’s your audience. Your access point could be as simple as a LinkedIn DM, a Facebook group, a podcast, a referral. And your action that you’re asking them to take is not, hey, book a call for me so I can so I can sell you stuff, but your action could be as simple as, hey, here’s this webinar on the five things this, three things that. And then you start to collect um start to collect obviously um you know soft commitments and and interests. An example of this is you could literally be a CPA who works with high net income earners and literally do uh a webinar uh a co-list a webinar with him where you market to his list where how a veterinarian can invest in real estate like a pro without having to do all the work. So there’s a lot of different versions of this that you guys can start really implementing with. And the last one I’m going to mention on this is your content and and and many of you guys when I say the word content you guys start to start to cringe but ultimately content is not a hard thing to create with with act of now it’s with Chad GPT Claude all these different platforms. Once you have your unfair advantage package, whether you do it or you have someone help you with it, it becomes a lot easier for you to start actually creating content that people like. So, we’ve got the first two. We’ve got your unfair advantage package. We’ve now created your uh ability to generate investor leads. And the way I’m proposing you do it is that you don’t have to be the one that has to constantly message everybody. You know, within my organization, we we generate over 2,000 leads a month. And I can tell you, I’m not the one sitting there pinging everybody all the time. It’s it’s it’s just not it’s not possible, right? So, how do you do it at scale? And by the way, if you’re sitting there, of course, Marson, if you have a team, you wouldn’t do it. Guys, initially before I had a team, I did it myself and it worked. So, what I’m sharing with you, if you have resources, sure, put some money behind it. But if you don’t, you can start this on your own, prove the model, create some revenue, and actually get get the result that you’re looking for. So part three is then having investor meetings that actually close. So rule number one is you pitch less, you posture and you build belief within your investors. So I can tell you that and and you guys know this to be true. Within the first two or three minutes of meeting somebody, you have a pretty good sense in your gut if I’m going to work with this person, I’m going to talk to this person again, do I see value in this relationship? And I can tell you that investors within the first two to three minutes are showing up to that meeting and they’re in their mind making up their mind about whether they’re actually going to pursue a conversation with you. So, you know, I can tell you this is a little bit more 2.0 or 3.0 no trading. But what you want to create is an environment where they show up to that meeting with you, not thinking if they’re going to invest with you, but already have them primed in an envi already have them primed in a state where all they’re thinking is how much and when they’re going to be investing, not if. So, how do you create that environment? Well, there’s several steps before the meeting. Think your unfair advantage. Think the lead genen system that I’m talking about. But then in that meeting, well, some tactical things you guys can do. Number one is start the meeting by actually asking them some questions and let them talk first. And it’s really important that you guys set the frame where you just you let them know right out of the gate, hey, so let’s see if this is even a fit for us. And again, by the way guys, if you guys want the tactics around this in the capital connectors community under my how to raise capital master, there’s literally the entire scripting and framework on how to conduct these meetings. So use that script and then combine it with your unfair advantage, the project and how investors get in. And I can tell you right now, your ability to lead that conversation is going to be a hundred times more fruitful than just showing up and immediately hard pitching the deal, the market, the product, whatever it is. Because even if you get your pitch out in that 10 or 20 or 30 minutes, that person will probably not come back to you. They’re not going to remember half the things you said. You’ve built no relationship. And ultimately, there’s really no reason for them to do your deal because the deal, you know, you’re commoditizing yourself through the transaction. They’re comparing your spreadsheet to someone else’s spreadsheet. And if you’ve been in this business for at least 5 to 10 years, look, you know that nobody models out how they’re going to lose your money, right? So, ultimately, everybody’s modeling the best case scenario. And if you’re comparing yourself at that level, you’ve really commoditized yourself in the investor’s uh eyes in in in my opinion. So again, lead with, hey, before I walk you through the deal, do you mind if I ask you why you’re even considering alternative investments right now? It could be as simple as that. Well, you know, dot dot dot dot dot. Right? So, all right. So, further down the conversation, you have your discovery period. you share what you’re doing and you’re you’re determining fit and and how you guys can work together and you end up getting some objections. People might say things like, “Well, I don’t know. I’m not sure about this. I’m not sure about this.” So, what I want to share with you guys is a framework. And again, if you want the full framework, go to Capital Connectors. It’s in the uh how to raise capital master, but it’s called comm. Comm stands for cushion, ask, leverage, and move. So, in other words, hey, great question. Most smart investors actually asked exactly that. Now, when you say X, what do you mean by Y? Leverage. So, look, I mean, it’s a really good point. Totally get it. And then answer the question. So, on the last three deals, boom, boom, boom, boom, boom. Finally. So, did you want me to set that aside for you? Da da da. So, I don’t really want to get into the full sales train on this call, guys, but but it is a it is a really important aspect of systemizing your actual approach with investors. The last piece that I want to get into before I answer some questions here, guys, is so you’ve got your unfair advantage, you’ve got your lead genen, you figured out how to conduct your meetings in a way where it’s scalable and you can maybe bring some people into your team to actually help relieve the pressure of you having to do every meeting. Now, what ends up happening is you have some capital raising systems that’s that that that that are hopefully going to scale. Now, a good way to know if you have a scalable system is well, if you’re not there, is it going to work? If the answer is well no because I got to do this, I got to do this then then you don’t have a system. You’ve just made yourself a cog in the wheel. So how do you build infrastructure so that it’s running on its own and not just based on on hustle. So, some tactical examples for you guys is once you’ve gone through the process a few times with investors, record every meeting uh and future meetings so your team members can actually replicate your SOPs, create a simple notion board or an SOP for how you raise, follow up, convert, and reinvest. And you can literally have a deal launch timeline created so that your a person that helps with you on the administrative side knows what the handoff looks like within your business. So a good example of that is automation. So for example, you may have within my team, I encourage my team to have at least three meetings a day, three solid meetings a day with with prospective uh clients. And what ends up happening is well, one day, two days, three days is fine, but after a few weeks, you end up having dozens, if not a h 100red plus people to follow up with. So, how do you create an environment where those people you met on day two, still feel like they’re engaged on day 18 or day 21? Because I can tell you, most investors, even if they’re super excited, they don’t just meet you on a Monday and write a check on a Tuesday. Some people need three weeks, some people need three months, some people need three years or somewhere in between. So, how do you create those those those touch points? So the the five uh email workflows that I recommend you guys incorporate into your business. Number one is for soft commitments. Number two is for people that no show your meetings. Number three is people that attend your webinars. And number four is the clo postclo updates. So pardon me for flows. Uh the fourth one is postclo updates. So in other words the people that become investors what is the cadence of communication with those people after? because I can tell you the easiest people to raise capital from are people that have already invested in your business. So, I’m glad I had a chance to share that with you guys. I think it’s really important that you recognize that this is these four steps within your business. For context, guys, I’ve been doing this for 20 years and I can tell you that these four steps have always been the four steps. The only thing that keeps changing is the technology that we’re able to use to be able to execute on this. And I can tell you guys now with AI and and all the cool tech that’s out there, it’s not replacing the process. It’s actually just speeding it all up. So literally, we’re in the process of beta testing a few GPTs where they actually help us within our team perform those different components faster. And the cool thing is because I’ve been able to take take my mind and fractionalize it into the different components, everything that we’re doing with AI now is actually happening exponentially faster. So, um there’s two ways you guys can go about doing this. One is that spinning of the wheels at each phase is is is is going to take some time because there there there’s some spinning that that’s going to have to happen. Or two, depending on where you’re at, plug into a proven system. my system, a system, any system that you can actually just start to implement these four core four within your business. Now, what’s interesting is if you’re sitting there and you’re watching this and you’re like, “Well, I run this other business and it’s the same thing, right?” Because the format of being able to get people’s attention, which is your unfair advantage, and build trust, the ability to funnel those people into your business and then convert them into customers and then be able to serve them and continue to have the conversations with people that are at the top of your funnel. Those are the four basics of of being able to build a business where you have to go out and find your business. So, glad I shared that with you guys. Um, what I’m going to do is Erin, let’s let’s go through some of the questions here. see if we have some questions. Um, and I I’ll go through this as well. By the way, these questions, they could be about the core 4 and what I’ve shared or they could literally be the some of the questions that we’ve had uh sent in over the last few days. So, let me take a look here. Uh, Alonzo, you got your first question here. I plan to set up a fund of 5 to 10 million to potentially purchase rental properties. Uh, I’m concerned about the legality of providing financing in my state of Utah. Do I need to be a licensed broker, agent, lender? I I don’t know. I I’m not any of those things in Utah. So, if you’re concerned about it, you should talk to your lawyer. Every state, every every jurisdiction has its own rules. Um, I can tell you that there’s a major distinction between you owning something and then selling it versus you just brokering for other people. And that applies for finance, real estate, uh, capital raising, whatever it is. If you are a principal on a transaction, what and this isn’t advice. This is just my understanding of it generally. But if you own something or you’ve you’ve built something and then you want to trade it, sell it, fund it, whatever you want to do with it, that’s a fundamentally different conversation than you just wanting to, you know, connect, you know, a buyer and a seller or whoever it is and then be the broker in that situation. Then the some states have more specific laws. Other states are much more uh liberal there. But again, that that’s that’s what I could share with you there. Can you provide guidance uh SEC? Uh yeah, you got a complicated question, man. You’re asking me every everything all at once. Can you provide guidance about requirements for SEC licensing, reporting of transactions, and the reggae 50? So, I’m not a securities lawyer. I’m not going to be answering this question. You need to go talk to a securities lawyer. What I can what I can tell you is if you’re raising money, it’s regulated. And if you’re brokering activities, whether you’re selling houses, selling financing, selling private debt, whatever you’re doing, that’s a broker related activity. Depending on the state, that’s probably a regulated activity. If you’re an owner in something and it’s your money or investor’s money, you pro well, you’ll definitely have SEC requirements as far as I understand. Um, but you’re you’re not going to be brokering because you’re the owner of said thing. Anyway, you’re asking a very generic almost like how do I do business in in the US and um best thing to do is I’ve tried to giving you like a highle framework. Best approach is to approach your securities attorney and ask them about it. Now, if you’re asking me specifically about setting up a fund, I can tell you right now all funds I’ve never seen a fund that was exempt from being SEC compliant. So, if you’re raising money, follow the rules. Uh it’s pretty pretty black and white. The good news, guys, is if you’re going to be raising money, hopefully you’re thinking big enough to build a big enough business, whether it’s a couple million or multi-ight or nine figures where there is a budget for you to actually hire those people. But whatever you do, as soon as you start taking investor capital, make sure you deal with a securities attorney first and foremost and and obviously get the advice. Don’t get cute. Don’t look for carveouts that they’re they don’t exist and I I wouldn’t I wouldn’t be doing it. Um, so Alonzo, hope that gives you some context. Uh, next question. I’ve been working in the single family real estate space using my own capital for deals. My challenge is I don’t know how to properly structure deals when involving outside investors. Specifically, what investors expect, what should I offer, and how to present a deal to them. Okay. Um, so you got a few questions in here, but ultimately, look, I mean, you’re you’re asking you’re asking a good question. You’re just asking a really big question. So ultimately when you guys learn about raising capital, what you need to be very clear on is the deal itself. Does it like does it make money and how much money does it make? And not all deals that you can do with your own money have enough room for an investor. So just to kind of clarify that. So what I mean by that is I’ve looked at deals where it’s like hey it’s like with my money sure I can I can get a good return on this and it makes sense for me because of these other reasons but there isn’t enough margin in a deal to bring in an investor. So not all deals are good deals for uh for investors. Um this is more of a broad statement but with single family deals or single family uh transactions if that’s what you’re focused on uh haram there um most of the people so even within our community within uh the M1 inner circle we have a I’d say a couple dozen people within our community that have what’s called private debt funds where they literally set up a private debt fund think so think about like hard money lending except you’re your own hard money lender at a lower cost. So instead of paying somebody 14 or 18% plus fees, maybe you pay your investors 10 12%, whatever it is, and then there’s no fees. And then you can use that capital to do your fix and flips or or and then use that to to refinance out. I’ve seen that work with single family, but I I I haven’t really seen people do well with equity based funds for residential, if that makes sense. Actually, no, that that that that’s that’s not true. back in 0 10 11 12 I saw people do equity funds where they were buying houses no debt just straight cash and they were buying houses for pennies on the dollar and and that worked then because the prices were so low but today the only things I see working for residential single family is like debt based funds you know which which I just described. Uh the second the second part to your question is currently I have a 45 home town development $6 million project. Uh, I already own the land, but I need guidance on how to raise necessary capital and structure the deal to attract investors. Um, yeah, look, I mean, that’s that’s a bigger question. I’d just encourage you to hop on a call with my team. U, I mean, broadly speaking, what I can tell you is that a project like that is is definitely within the scope of you raising equity. So, you’ll probably want to roll the land in as equity as part of your balance sheet. Um, and then you’re going to want to create either a straight equity or preferred equity type of deal with your investors. ultimately what you’re solving for is a level of return that makes sense for the investor and also keeps you excited to obviously see the project through. But um yeah, if you want to if you want to hop on a call with the team, uh happy to discuss that with you. It’s we we we need to get a lot more details out of you. But yeah, um the first thing I’d probably end up doing is rolling the land into it and then getting as much of the uh the risk off the table in terms of proving out the model and sales or pre-sales or whatever it is. So that when you have when you go get equity from investors, you already have your financing lined up. You already have some pre-sales if if if you’re selling these or or at least you’ve done a market study to make sure the rent the units rent, whatever it is. the more perceived risk you could take off the table, the better it is and then rolling that into an equity or preferred equity structure is probably uh probably a good good idea there. Uh Kush, what are the returns investors are looking for in multifamily syndications these days? Uh yeah, uh depends on the investor. I mean, I I don’t want to give you a non-answer, but really it it depends on the investor. There’s that there there’s two you guys got to remember when you’re looking at investing it’s you got to look at investors can put their money into anything right they don’t have to do multif family they can they can invest into anything so if they’re sold on investing in private real estate you have to look at it from almost like an institutional lens you have what’s called core core plus value ad uh and then development and then you have raw land those are kind of the major pillars now the further core is theoretically the safest asset that you could possibly invest in. So, think about a brand new government buil uh brand new building downtown whatever city uh government lease next 20 years brand new building core core core like you know guaranteed rent increases that kind of stuff. That’s like core core plus gets away from that value ad is what many of you guys are used to with the multif family space. Then you have development and then you have uh then you have land. So depending on where interest rates are the return expectations move for people. So for example when rates were 0%. It was core was you know four to six or six to eight and you know land would have been in the high 20s or you know something like that. Today because rates have moved everything has kind of moved. So core is 6 to 8 or 8 to 10 I forget now. And and everything moves down the path. So multif family I mean you’re in the teens. Is it high teens? Is it low teens? I don’t know. depends also how you define returns but um investors are definitely looking for higher returns today which is compared to the risk but the the other thing that’s more important Kush is most people are more interested they they really want to understand return of capital before you can show them return on capital so in other words show me the two or three ways that I get my money out of this deal as opposed to hey let’s aim for the stars and make 30% on our cash that’s in my experience a lot More investors are more sensitive about return of capital right now than return on capital. Case in point 089 when we were working with MC when we raised that capital forum we were really focusing on where the value was relative to the the ability of of us not being able to see a return for the investor. Again, the likelihood of of losing money was very low. Still there, but very low. And the fund I did after that, we did an 8 figureure equity fund where we were buying strip malls. Uh we were buying medically anchored strip malls again in Arizona, Chandler, Mesa, things like this. And same thing, I mean, the likelihood of us losing our money when we were buying stuff for 20, 30 cents on the dollar, it was there, but the propensity was a lot less. So start with showing people, especially today, I I’m I’m more focused on showing return of capital than return on capital is is is what I’m trying to say. Uh next question. What are the three most common setbacks or challenges in borrowing you often face for raising capital? Uh thank you for sharing. So I just want to kind of dispel something. Borrowing money is not raising capital. Just to be very crystal clear with everybody watching or listening. Going to a hard money lender is not raising capital. I don’t consider that raising capital. That’s literally borrowing money. So let’s just be really clear on terminology. Borrowing money is a different framework than raising capital. And uh so if you’re if you’re asking the question about what are the challenges for borrowing money today? Well, borrowing money today is more difficult because all the defaults, all the bad debt, all the all the loan loss provisions the banks are having to underwrite for right now. It was the same thing back in uh so 2010 2011 when I had that when we did our fund. We were buying we were buying all cash because there was no lending appetite. I mean, you had Fanny and Freddy and HUD, but they weren’t really doing any of the medical or or uh commercial stuff. So, we had to buy strip malls cash. Um, so there it there weren’t challenges. There just wasn’t financing. Today, there is financing. We just refined uh one of our assets uh with uh it was with Fanny uh 64% LTV. Initially, they wanted to do less than that, so we really had to work with them to even get them to what used to be just a rubber stamp. Um but they’ve obviously become much much more conservative which is fine. So those are challenges. U so Hannah I mean on the lending side what’s challenging number one is they’re really scrutinizing the actual borrowers a lot more. Again if you’re dealing with a hard money lender they’re just looking for the coverage making sure that you know you’ve got some experience. But if you’re talking about larger transactions, having a strong team is extremely important today, more so than anything else, both on the acquisitions and asset management side. Now, if you’re talking about on the capital raising side, the actual capital raising side, uh the biggest challenges that people are having is they’re still they’re still using the playbook from 2022 and 2023 where they’re posting the deal and they’re talking about upside and growth and all this stuff when most of the market has already moved on and number one, people are looking at the operators first. Like when I when I talk about the unfair advantage of being the starting point, we used that out of necessity during the last recession because deals didn’t build trust. People did. So ultimately using that uh unfair advantage positioning is the is the is the thing that most people aren’t doing and it’s the reason why they’re strugg they’re they’re saying things like, “Oh, it’s so hard to raise money today.” any I I was literally just at Limitless at the the conference in Dallas and uh I was on a capital raising panel with Ken Moy and Mauricio and and a few other guys and a few people came up to me like yeah you know it’s really hard to raise capital today and talking to them after and it’s because they were still doing it the way they’ done it two three four years ago they’re still using the deal as the crutch. So, I’d say the first the most the biggest most common issue that people have with raising capital is they use the deal as the crutch. Number two is they really lean into the numbers as the just as the logical justification as to why somebody would buy. And number three, because of one and two, what ends up happening is you end up commoditizing yourself and your offer because now you’ve left it up to chance. And now your spreadsheet compared to someone else’s spreadsheet is the deciding factor. When anybody who’s on this call knows that ultimately there’s a hundred things that go into a performer and ultimately if I want to make it look more profitable, I can adjust this, I can adjust that. Those things probably won’t happen, but the problem is you’re doing it to yourself by comparing numbers to numbers and and and and doing it that way. So, I hope that gives you some context. Uh George, what is the proper way to structure an entity and advertise yourself to raise funds? So, I think you’re asking two questions there. I I I think I think what your intention is is to do what’s called a 506c, which is the regggd. Again, I’m not a securities attorney, but uh the the way I’ve done my funds in the past is 506 C is the one that allows you to advertise uh broadly, but you’re only accepting capital from accredited investors. That’s not so much a structuring thing. That’s more of a relying on a certain exemption with the regulators. As far as structures, I mean, look, people use LLC’s, they use LPGPs. What what’s what I think you’re asking me is which one is allowing you to be able to go out and publicly market. Uh, my understanding is that’s a 506c. Um, there there’s crowdfunding exemptions and things like this, but the most commonly used one I I know of is is the 506c. Uh, Edwin, is there a commission you charge for raising capital? Um um if you’re asking me if we charge a we so we don’t raise capital for other people just for context that’s a broker dealer activity. Um if you’re looking for an entity to raise money for I’ve engaged multiple you know broker dealers and security firms uh across North America over the years. And just for context hiring a broker dealer isn’t a horrible idea if you’re already running a significant eight or nine figure op probably a nine figure operation or more. So if you at least have at least a 100 million plus aum and you’re already running a pretty good size business and you want to delegate or almost abdicate the responsibility of of raising capital, um broker dealers are are definitely an option. The challenge with broker dealers is that they’re going to charge you fees, significant fees. Typically on the capital raising side, they’ll charge 5 to 10% as a commission. Uh and that’s also per dollar that they raise. And that’s also assuming they want to raise money for you because just because you need it doesn’t mean they want to work with you. So the way they flush that out is they charge you a due diligence fee up front. Typically it’s, you know, 15 to 25,000 upwards of $50,000 upfront. So what’ll happen is they’ll charge you the fee. The fee does not mean that they’re guaranteed to raise money for you. It’s just you covering their overhead of them auditing your business effectively to make sure that it’s built in a way where they want to work with you. So, uh, there’s a cost there. And then assuming that they take you on, most broker dealers in my experience will take you on what’s called the best efforts basis. So, in other words, they’ll say something to you like, “Hey, you know what? We intend to raise5 or$10 million, but there’s no guarantee.” So, in other words, we’re going to do our best. Um, and then you’re going to have to go talk to all their sales guys and do the chicken dinner thing and whatnot. And if they do succeed, you owe them commissions, which is five or 10%. Um, and depending on how much money they raise relative to how much you need, they may also ask you for a piece of the equity, which is not uncommon. Anywhere from I’ve seen 10% to 30% of your GP of your backend. So, um, we don’t do that. For context, I’m not interested in doing that. What we do is within our business is we have M1 Real Capital. We we raise our own funds. We know how to do these things internally. And if you want to replicate our success, you can apply to be part of our Emmon inner circle and see how we do that. So you you don’t have to guess, but we we don’t raise money for our clients. That’s that’s not the business we’re in. Uh next question, how do you structure a deal uh when you have one or two partners in the deal? What is the split? They bring the down payment. What is a split on cash flow? The answer is whatever you want. I know it’s it’s not what you’re expecting, Ben, but look, this is your business. It’s up to you to negotiate whatever makes sense for everybody. Now, the good thing here, Ben, is you have always the ability to do another deal. So, in other words, if you do a deal where you’re not happy, which earlier on in your process, you’re almost happy just to get a deal done, and then you realize very quickly that uh you real you realize very quickly that, oh man, maybe I gave away too much this, maybe I gave away too much this. And if that happens on a deal, I’m of the opinion it’s better to do a deal successfully and get a few deals across the line and then maybe relook at the economics after and not really think too hard on it the first or second time around. But as a general rule of thumb, if you’re thinking about it, there’s three legs to the stool in being able to get a deal done, whether it’s real estate, business acquisition, whatever it is. You have the acquisition process itself of the property of the business. You have the asset management of the business or the operations of the business. the day-to-day stuff and you have the capitalization of the of that business or the property. So, those are the three legs of the stool, you’re going to need all three of these no matter what you do. So, if you think about it that way, logically, if everybody’s pulling their weight on all three pillars, then there’s a big argument may be made for you to be able to split it that way. Now, there’s always going to be exceptions. So for example, the guy who’s doing the asset management is also bringing in some of the capital but the guy who did the acquisition brought in the so so it’s a negotiation but just to give you context a third a third a third is typical in the context of that. Now how you divvy that up and how you divide it obviously that’s that that that’s up to you but again the the good thing here guys is if you do a deal and three months or six months later you realize that it wasn’t a good deal for you don’t have to do that deal again. You’re never you you’re never going to do a perfect deal, just so you know. Like it’s it’s just I’ve never seen I’ve never done a deal where it’s like, “Oh man, that was perfect.” Like everyone got paid fairly for the work that it just you just you reiterate, you get better. And you know, the cool thing is is I’ve had deals where people were supposed to be a third or whatever owner and three months into it, they’re like, “Hey, I’m just going to get my shares back. I had this other thing happen.” Whatever it is. So you also learn a lot about people through the process as as you as you go through this. So you you’ll figure out what’s what. Um and as far as the split on the cash flow, so that’s another thing. It depends on who’s in the business full-time, are you getting paid fees? How are you getting paid? How are you distributing all that with your clients? Uh that’s one of the things that we help our clients implement on on a strategic level. Because um lawyers are great. They’ll make everything legal. And if you ask them, well, what should I do? They’ll say, well, here’s what my other client’s done. And that may or may not be the right thing for you, but it it it’s better than than than just guessing, right? Uh, next question here. Uh, what is the most someone has raised uh with our system? Uh, I mean, for context, our clients have done over a billion dollars in their own deals. We should do another survey. We haven’t done one in a year. At the time, I think they’d raised about 250 or 300 million. Uh, survey is about a year old, so it’s quite old. Um, I had a client recently, they did 9.4 9.6 six million over a weekend. So again, is that normal? No. Is it possible? Yes. Uh firsttime capital raisers, if they raise a couple million bucks, they typically consider that a success. Uh these individuals, Candace and Corey, they’ve been at it for a couple years. So for them to raise 9.4 9.6 million over a weekend, uh it was it was a big stretch, but it wasn’t, you know, they’d raised millions before that as well. So, uh next question. I’m raising specifically for a hard money lending fund. Uh so this is a a Jared I’m not that’s kind of a half question. I’m not really I’m specifically raising for hard money lending. So this is a straight debt income option. Um I I don’t understand the question, but I can tell you that a lot of our clients and yes, there’s a lot of people that do private debt funds. Uh I did a 67 or $70 million private debt fund years ago. It wasn’t even in real estate. It was equipment equipment financing. So yeah, there’s there’s all kinds of creative options you you can do uh within the business. Uh Lori had a question. Oh, pardon me. Kevin had a question. What would you do do differently in capital raising than others at current market? Yeah. So Kevin, I the question probably came in earlier. The the first thing that I the most important thing is package you and your unfair advantage first and foremost. And look, if they’re not bought into you and your team, it doesn’t matter what your deal is. It really doesn’t. Especially in markets like this where people there’s literally what I call a crisis in confidence right now. So, people are some people are scared and I can tell you right now if the interest rates don’t drop anytime soon and there’s more defaults and more commercial lending uh fiascos, uh people are just going to continue to become more and more nervous and fearful. So you trying to position a deal the way it was done 2 3 4 years ago is going to get you nowhere. But if you’re focus leaning in on your unfair advantage, how you guys are positioned for the market, how you guys see opportunity, how you’re best how you’re best equipped to take advantage of what’s going on, that’s a different conversation and something investors are are definitely going to be open to to listening to. Uh Lori, what is the best way to create a business plan to raise money for assisted living facilities? Uh such such a good question. I love the whole assisted living space. We have a few of our clients that are in that space. And the big thing with assisted living facilities is you’re you’re in a lot of ways, you’re doing God’s work. I mean, there’s there’s a there’s a massive shortage uh in the United States, in Canada, in Europe. There’s just a shortage shortage worldwide of good uh assisted living facilities. So, with that business, that business itself could be your unfair advantage. and then tying how you got into that space, what your story is, whether it’s personal experience with some of your parents or grandparents or whatever. Everybody has like a personal story around that. So, I would talk about a how big the industry is, b how much of a gap there is in the industry, and three c talk about how you got into it and how you maybe stumbled into it or what you’ve been able to do in the space. And that is a very uh that is a very strong and compelling message to be able to tell. So, I’d start with that. Obviously, having the financials, your modeling, all that stuff, but really nailing your unfair advantage is is that that that’s the biggest thing with with the assisted living space is is really nailing that. Uh, Miguel, how much how much is AI improving the success of this kind of strategy approach? Uh, the better AI gets, the more meaningful and powerful what I teach becomes. uh and these systems are because if you think about the core four in the sequence of activities that we do even within our own business we’re literally in we’ve been using AI daily for probably two and a half maybe three years now and I can tell you it’s made a massive like quantum level shift in every single one of my departments all my teams all my staff are required to use AI every single day I give them time to play around with it on a daily basis just so that they understand how they can use it in their business to make what they’re doing better. AI is not going to make you obsolete, but it will AI itself will not make you obsolete, but someone who knows how to use AI better than you will. So, the most important thing you can do right now is literally in in the context of raising capital is package that unfair advantage very quickly. um either on your own or have us do it for you. Have somebody that knows what they’re doing do it for you because that unfair advantage makes everything else that much more powerful. And with AI, you c you can do things 10 times faster. Now, many of you have probably messed around with Chad GPT or Claude or whatever Grock and you’ll know this garbage in, garbage out. If you ask it a stupid question, you’re going to get a stupid answer. Or if you ask a vague question, you’re going to get a very vague answer. So inputs are really important. And part of my unfair advantage is because I understand this business, this this capital raising business better than most is I know exactly how to elicit a response or reaction from the AI and give it very specific instructions and then three, four, five layers deep of instructions. So it then knows what to do because it doesn’t know how to guess the what you would call intuition. It’s not built that way. there’s, you know, it it just it doesn’t uh it it doesn’t have that. Maybe one day, but it doesn’t have it today. So, uh AI is definitely a huge boost for anybody who’s a specialist in any specific business. So, you know, if you’re not a specialist, I mean, what I do is I literally buy the specialized AI version of whatever it is within my business. We have multiple service providers that we’ve engaged and hired for various gaps that I have for for that very same reason. But AI is is is the equivalent of learning how to how to use a keyboard when the internet came out. It was it was that that pivotal. So definitely don’t sleep on that. Uh next question here by Rob. I’ve got a few more questions I’m going to blow through here in a few minutes. Uh, and again guys, if if if if you’re sitting there and you’ve already raised a couple bucks or you want to raise a couple million dollars, you’re a fund manager, capital raiser, uh, real estate investor, and you want help with implementing this into your business, book a call with my team. There’s a link included. Um, worst case scenario, we’ll help you lay out a plan for yourself that you can action. Best case scenario, like, hey, I want some help on this. Great. We can talk about how we do it. If you’re qualified, if we can help you. uh M1 isn’t a fit for everyone and that’s okay, but we’re happy to hop on a 30, you know, minute call to kind of just flush things out and and and see if we can assist. Um what was the next question here? How oh, how applicable is your system to alternative investments such as agriculture plays? Yeah, super applicable. I mean, for context, guys, I’ve done I mean, obviously I’ve done a lot of different real estate. I’ve done operating businesses. We’ve done rollups. I’ve done uh private debt funds. We’ve done tech. I’ve done uh uh consumer services businesses. The skill of being able to package your unfair advantage, drive qualified leads, close investors, and build capital systems within your business to scale that is a skill in of itself. And you could apply any legitimate business on the front end. Whether you’re doing agriculture, farms, you’re buying barber shops, you want to roll them up, whatever you want to do it. It it’s it’s the other side of the coin, if that makes sense. the capitalizing the business is is its own business. It’s its own skill. So, um definitely can can assist with that. Uh what’s what are the funds what fund structures are best when starting to avoid and why if if even matters if even that matters. Yeah. So Rob, Rob, it’s a good question, but to answer your question, I mean, most people that do a deal the first time, they typically do a syndication. And you know, as my buddy Edward would say, you never want to do your first deal. And I really like that saying a lot because effectively what you want to do is be part of another team where you do your first deal as somebody’s 10th deal or 20th deal or 30th deal. So my point is is by the time you do your first deal, it’s like your third deal or your fourth deal or your fifth deal. Most people what they do is they typically do a syndication. So they’ll do a very specific acquisition, raise the capital, get to work. What ends up happen and by the way, if you’re newer, that’s the that’s the cleaner, easier route to go. But if you’re sitting there and you’re like, “No, no, we’ve already bought five or six deals and whatever it is.” While looking at funds or funds of funds makes a lot of sense because you now have the track record and the team and and you’ve built some credibility, but if you’re newer to the business, do your first deal as part of somebody else’s fifth deal or 10th deal if if if that makes sense. Uh Ben, what’s the difference in raising 100K versus 100 million? Well, bunch of zeros for starters. Uh that I mean the look the skill. So it’s interesting the skill the core four is the same but what ends up changing is the degree in which you have to be able to understand how business works how to read financial statements audited financial statements governance structure controls things like this uh so I did a we did a hund00 million commitment on uh the consumer services business flew out to New York uh and that was that term sheet was not one page that commitment was I don’t remember 16 18 pages audited financials, disaster recovery plans, independent board of directors, all there’s there’s all kinds of governance structures that are required. But the good news is is fundamentally going through the core four is effectively what we ended up doing to end up where we did with that $und00 million commitment. So there’s a lot of differences in terms of nuances, but you also have to be in a position where your business can handle that kind of capital because just because you’d like to deploy a h 100red million, they want to look at what you’ve been able to do with the first million, first 10, first 20, first 50, so on and so forth. Uh Eduardo, is the system adequate for all types of fundraising, VC, hedge funds, NOS’s, charity, or do adjustments need to be made? Yeah, I mean again capital raising and I know some of you guys typed in this question earlier, but if so, first of all, capital raising is a regulated activity. So there’s always you got to make sure you’re following the rules. But the core four that I laid out in the way that we implement the system is the process that you’re going to have to either figure out on your own or get some assistance on because those are the steps you have to get people’s attention. You have to get the right people’s attention. You have to put them in a process where they’re showing up to your meetings thinking how much and when they’re going to invest. have a very specific way to turn those commitments into capital and then be able to scale your business as those capital commitments come in. So that is the same always uh going to be there. Now is your data room going to look different? Yes. Is your marketing uh hook going to be different to get people’s attention? Yes. Because somebody who’s doing assisted living versus buying agriculture land or versus uh a tech company rollup, those are different value props. But effectively everything when you strip away the nuance it all becomes the same process. Uh last question. Uh actually I’ll get I’ll take one more question here because we’re we’re running out of time. Uh if your unfair advantage is so unique no one else can copy you, how do you assure investors they will get their money back if you die? Well, those are two different conversations. So, uh, a good way to put that back on to you CW is if you’ve invested in Tesla if if Elon for whatever reason, knock on wood, passed away, would the company collapse? No. Cars are still being sold, things are still happening. I think what you’re talking about is keyman risk, and that’s a different issue. We’re talking about packaging in your offer to get people in the door to have them stay. Ultimately, if you think about any business you guys have done business with, you did business with somebody, but then when you’re in that business, you meet all the other people in the company. That unfair advantage is meant to get people’s attention, build the trust and loyalty to have someone work with you to get going. But once they get into the ecosystem, then hopefully eventually as you grow CW, you have other people within your team uh to become the people that they can actually rely on within the organization. So, I would be worried if the person that was the show pony, as I like to call it, was the only person within an organization because ultimately that’s not a business and that would actually create the keyman risk, which I think is is the thing that uh that we’re mit mitigating against. So, all right guys, those are really good questions. I know there’s uh there’s more coming in, but uh I got to fly. So, I appreciate you guys. Uh again, if any of you guys are interested in learning more about how to figure out how to implement the capital raising system into your business, feel free to book a call with my team. Uh we’ll walk you through it, give you a game plan, and then you can decide what you want to do from there. I hope this has been useful. If you guys have any other questions, uh feel free to join the Capital Connectors group in school, SK L. Uh it’s a free group. I think we’re just under 2,000 members, so help us push it over the line. And of course, uh you can post your questions there. And if you guys know anybody in your network that is a capital raiser, business business owner, fund manager, operator, and this is the kind of resource they need, obviously, I appreciate you sharing that with them as well. So, that’s it for me, guys. Thank you so much, and we’ll uh we’ll see you guys again soon.