Welcome back to the Hybrid Real Estate

Professional Podcast, the show where we

explore what it really takes to build

wealth through real estate without

giving up your life in the process. I am

your host, Aaron Amin. Today’s episode

is a personal one for me and it will be

a solo episode. I’m going to pull back

the curtain on what it was like to raise

over $2.8 million from investors to fund

our first memory care development

project, Everwood Reserve. Whether

you’re raising capital now or just

starting to think about it, this one is

for you. And before you hit skip, even

if you are a single family investor or

even brand new to investing, I encourage

you to consider how this might relate to

you, whether it’s now or in the future.

It was less than a year ago that we

decided to embark on this project. So,

believe me when I say things can change

very quickly. It’s been about 4 months

since we in earnest started preparing

for and launching our capital raise

campaign. And as of the time of this

recording, we just finished it about

four days ago. So this stuff’s very

fresh for me, but I wanted to kind of

try and create some buckets of lessons

that I learned. So some of this might

sound obvious, but believe me, it is

worth digging into and internalizing. So

first, you raise capital at the speed of

trust. This is ultimately a trust game.

A good deal is a core component of what

people are investing in, but there is a

a much larger component of whether they

believe that you and your team are the

right ones to steward their money and

take care of it and execute the plan

that makes that deal good. So, a a poor

operator or someone who’s not

trustworthy or someone who can’t look

someone in the eye and make them feel

comfortable, uh that is going to be a

tough sell even if the deal itself is

good. And alternatively, you know, a

mediocre deal with a really experienced

operator or somebody who has navigated

choppy terrain before, if an investor

has trust with that person, they might

even consider something that is slightly

lower projected returns for the sake of

being with someone who they trust more

to actually take care of their money.

Uh, you build your credibility long

before you launch your campaign, right?

So if you think about a lot of people

that you might be raising from

especially if it’s your first time are

going to be friends, family, connections

that you have from you know different

points throughout your life uh that have

known you. They they know you well

enough to have an idea a bit of how you

think and ultimately you start putting

out signals to the world you know before

you even conceptualize whatever project

you might be raising money for. So for

me, I’m grateful to have started writing

content and sharing about the experience

that we had building our rental

portfolio almost 3 years ago now. And so

I didn’t have any idea that we would be

launching a campaign like the one we

did. But it it was born out of a desire

to share some of the lessons that we

learned and in the hopes that someone

might find value from that. And through

the process of starting to put that

stuff out there, I built a ton of

incredible relationships with investors.

again, mostly people that were buying

their own rental properties, but that

stuff parlays into different types of

relationships over time. Uh, and so I

never had the intention of, oh, I’m

going to build this list just so I can

eventually raise from them. That’s

that’s the furthest thing from the

truth, actually. But what I did do is

start creating a public persona and a

and a public brand so that if people do

consider our deal and they look in, who

is this guy? Uh, they can see, right?

Like, oh, I’m out there actively. I’m

putting out a podcast. I’m engaging with

people. I’m answering questions and I’m

broadcasting the things that I learn.

That is actually a very important asset

for due diligence that I learned was

even more important than I thought. Um,

so take that for what it’s worth. If you

think this is something you ever want to

do, I would highly suggest finding some

way to start sharing about what you’re

doing. Second lesson, uh, deadlines

create momentum, but only if you honor

them, right? So, this is one of the

hardest lessons that we learned is

pacing. So, we actually ran our offering

in two different phases. We did I won’t

go too deep into the details, but we did

a syndicated offering and there were two

different uh rounds. One was a 506b,

which means we could only raise from

people that we had pre-existing and

substantive relation with. So, I’m not a

lawyer. I just want to say that very

openly. Please seek your own advice when

you are considering launching offers

like this. But essentially what that

meant is we couldn’t talk about it

publicly. We couldn’t post about return

profiles. We couldn’t really even

suggest that we were raising money

during this phase. So we raised over a

million dollars during that round by

going to people that we already knew. We

we hosted a couple individual office

hours. We even just hosted a call to

share what the project was. Like it

wasn’t an investor pitch or anything. We

were just sharing what we were working

on. And then we used that to kind of

gauge if people were interested. We

actually had some people reach out to us

after that and express that hey when you

if you are raising money for this give

us a call let’s see you know if it’s a

good fit. So that was an interesting

round just because you can’t go posting

on Facebook far and wide hey I’m raising

money I need investors you know it’s a

20% return you can’t say things like

that. Uh so that was about a month and

we had to create deadlines that would

give people enough time to make a

decision and invest during that phase

while still sticking to our overall

timeline that we needed to hit the rest

of our deadlines. So as with any type of

campaign, most of the decisions and most

of the funding come towards the very end

of it. So if we had a twoe campaign

where we only gave people two weeks to

decide and fund, we probably would have

raised less money. But I bet those same

people that committed would have funded

by that twoe deadline. So you really

have to kind of manage expectations. You

have to manage the flow of

conversations. What we wanted to do is

give people enough space to make an

informed decision, but not give them so

much space that it compromised our

timeline or that they kind of, you know,

lose interest or lose steam. Most people

don’t want to fund any sooner than they

have to, which I understand. So, when we

ran it in two rounds, we had that first

closing and then we converted it to

what’s called a 506c offering. 506C, it

does allow you to advertise and um you

know, quote unquote solicit for

investments publicly, but the the

trade-off is it can only be accredited

investors. A credited investor is

someone who either individually makes

$200,000 or more in income and has for

the previous two years with a reasonable

expectation to continue in the future or

as a household u filing jointly it would

be 300,000 for that income threshold.

The other way to qualify is having over

a million dollar net worth and that

excludes any equity in your primary

home. So this of course narrows the the

pool of people who can invest in your

deal, but by being able to advertise

openly, you can obviously draw from a

larger overall pool of people. So when

we converted to the second phase, we

gave it again about a 4-week period,

which is somewhat short when you think

about the idea of having to go attract

and find new leads and start talking to

people and nurturing those relationships

who who don’t have the benefit likely of

knowing you for years and years and

years. So you have to you have to

quickly build trust. You have to make a

compelling pitch and show up very well.

And you have to run them through all the

decision-m process and the funding and

signature process. That’s a lot of work

in a very short amount of time. So I

would say don’t underestimate that and

make sure the deadlines you set are ones

that you actually stick to for the

purpose of continuing to drive the whole

project forward. So that’s something you

know we we might make some adjustments

when we do this again. Number three,

investors are not just buying into your

deal, they are buying into you. So, I

kind of hinted at this earlier, but the

deal is absolutely a critical part of

the the economics, the business plan,

the demand, whatever, the experience,

all that stuff. But at the end of the

day, there is a very critical component

that’s hard to define, and that is that

people want to look you in the eye and

see how does this person think? How do

they respond to questions? Do they seem

confident in their plan? Do they seem

unsure of themselves? If I ask a

question that they don’t have an answer

to off the cuff, are they responding as

someone who has confidence that they can

solve the problem or are they backing

off and showing signs that, you know,

they’re going to buckle if they hit

pressure? That stuff is really

important. And as somebody who’s

invested in other people’s deals, I

looked for the same thing. I wanted to

know are these people that not only

could I get along with or am I aligned

with on a on a values perspective, but

do I trust them to make decisions when

things don’t inevitably stick exactly to

the plan that they forecasted? Our

business plan is forecasted over a

10-year time horizon for the investors.

So, if anybody realistically thinks that

everything’s going to be exactly penny

for penny, situation for situation over

a 10-year period, I I’ve got news for

you. That’s that’s very unlikely, right?

So at the end of the day, people need to

trust our ability and our team, how we

think, how we operate to make decisions

that will guide us to the best possible

outcome for their investment.

Number four, not all nos are permanent.

So this is an interesting I I really

don’t like selling things and I I try

not to think of this as selling things.

Essentially, in my mind, it’s presenting

an opportunity that hopefully has

reciprocal benefits for both parties.

the investor gets to be involved in the

project that delivers, you know, very

favorable returns, especially compared

to a lot of the alternatives. Uh they

also get to participate in the impact of

the project that we’re making. Uh but

also, you know, of course, we need the

money in order to fund it. What happens

is timing is a big component of this. A

lot of people that want to invest might

not be liquid right now. They don’t have

the capital or they’re not um you know,

the timing is just not right for

whatever reason. And that doesn’t mean

that you just slam the door shut and you

you say, “Well, you are of no use to me,

so I’m not talking to you again.” These

are long-term relationships that you can

build and nurture. And even if you don’t

have line of sight on doing another

deal, just know that these are these are

people that clearly, if you’re having a

conversation with them, that means

they’ve expressed some sort of interest

in getting to know you and what you’re

doing. And so I think you know

understanding and taking that mindset of

this is not a permanent no per se unless

they actually say no stop calling me.

Keep those people in mind keep them

updated. Maybe put them on a separate

tag in your email CRM so that when you

send updates maybe every third update or

maybe the highle updates you ping those

people and say here’s how the project’s

going like here’s here’s how we’re doing

now. In our case this is the first time

we are operating a deal of this

magnitude. So, I think a lot of people

also want to see, you know, if they

didn’t jump in round one, well, you

know, were they making the right

decision because they weren’t fully

confident in you or are they going to

feel some FOMO if they see you posting

about how well the project’s doing and

some of the the key features and

highlights of of what you’re doing uh

once you actually get online. So I think

that that’s the idea of retaining these

relationships for the long term has been

important in my understanding of how to

raise capital. The other thing too is uh

that with sales, you know, followup, if

if you talk to anybody in just about any

profession, following up is an important

part of it. There are several instances

in this campaign where there are people

that we are very happy joined us and

they’re they’re aligned with our values.

There’s so many things that that are

great about having them on the team, but

they kind of disappeared for a little

bit, right? Or I had to reach out three

or four times. Sometimes I didn’t get a

response a few times in a row. I don’t

like bugging people. But what we needed

was a resolution. Are you a yes? Are you

a no? Or are you a now’s not the right

time and uh you know, call me a

different time. We need to be able to

categorize people into one of those

areas. If somebody says no, we will stop

contacting them. So, the follow-up was

key because we had to push past some of

that discomfort and actually, you know,

continue to follow up until we got to

one of those three labels. And it’s

really doing everybody a favor,

honestly. Like, if if somebody’s on a

list, that means that at one point they

expressed interest. So, we’re not just

picking up the phone and cold calling

random people and asking them if they

want to invest $100,000 in a memory care

development project. These are people

who expressed interest. So, all we’re

trying to do is get to the conclusion.

Are you in? Are you out? or are you

someday maybe? And the last thing I will

say, you know, it’s kind of a a

synthesis of all this is you have to

keep showing up every day with the full

confidence that the campaign is going to

close and you’re going to fund your

deal. It is really hard to do that. We

our target was $2.8 million. That’s a

lot of money, especially when our our

entry point our our minimum was $50,000.

To raise $2.8 $.8 million in $50,000

increments over two and a half months

would be very difficult, right? We’re

we’re lucky that we were able to have a

mix of people investing $50,000 and also

a few people that came in significantly

higher than that. And um if it weren’t

for some of the conviction and

confidence that not only do we have a

great opportunity, not only do we have a

great team, but this is going to move

forward. If you give off any indication

that you don’t believe in your own

project, then how could you expect

somebody to not only believe in your

project, but invest a lot of their money

with you, I sure wouldn’t, right? I want

to see confidence. I don’t want to see

arrogance. I don’t want to see people

being cocky or unrealistic. But I do

want to see conviction combined with a

little bit of humility that, you know,

we we are not um trying to play some

divine power. We are trying to put

together the right team, identify the

right types of opportunities and bring

it to the market so that we can fund it

and get it online and start changing the

community, impacting the community

around us. And in our case, we’re very,

very happy that we have a mission-driven

business. There’s a true need for this

for seniors in our community and beyond.

And we are taking step one out of what

we hope will be many to address that

problem and make a difference in the

world. So, those are some of the key

lessons. I am going to do a lot more

deep dives u within the community I run

and I’m also going to be putting this

out a little more detailed on my email

list. So, if you are not on any of

those, please follow the links in the

show notes and I would love to have you

on there. If anybody has questions or

wants to reach out and you know maybe

explore what this might look like in

their world, just uh shoot me a note and

let me know. I would love to hear from

you. So, with that, that is uh the key

lessons I learned from raising $2.8

million for Everwood Reserve. And we

will catch you next time.