Table of Contents - #FreeFlowFriday: Raising Capital Myth Busting Part 2 with Dave Dubeau
Welcome to Free-Flow Friday, powered by the Property Profits Real Estate podcast, I am Dave Dibble and I'm very excited to give you an over the shoulder learning experience around raising capital, as well as other tips, tricks and strategies to help you on your real estate investing journey. So let's start. Let's discover together. I'd love to work with other people in their money, my deals, but I've only got two or three transactions under my belt. I don't think I'm really qualified. To use other people's money, because I don't have enough experience. You know what? And there's that kind of makes sense, right? I mean, especially when we're hanging around with other real estate investors and clubs and whatnot, and you see folks that have done dozens and dozens, 50, 60, 100 deals or more hack on my podcast. I'm talking with people that have done five hundred seven hundred transactions when so when you when you're seeing people like that, when that is kind of your your cohort, your group that you're hanging out with. And again, that's that's the very top typically. Right. But when that's kind of what's what's in the back of your mind and you've only got two or three deals on your belt, you're going to feel kind of inadequate. But let me put this in perspective for you. Now, obviously, it is better if you do have some experience, but the level of experience that you need is really, really relative. To be clear, I don't recommend that you necessarily run out and raise capital from other people for your very first deal. I do think that you should have at least a couple of deals on your belt that are self finance. That is that is ideal. OK, but if you've got those couple of deals under your belt, then there shouldn't be anything stopping you from using other people's money and bringing on investor partners, money partners into your deals. And here's what you and I are real estate weirdos. And I say that in the friendliest, nicest way I can. I mean, we are I mean, you guys are part of this group going into real estate investing. You're doing stuff with real estate. The average person is not OK. And I've heard different numbers thrown around up here in Canada. I've heard that 95 percent of average people have never purchased a revenue property in their lives. Their own house doesn't cut. I mean, a revenue property, a property that is for investment purposes. OK, so if you even got one deal under your belt, you're already ahead of 95 percent of the population now down in the States. Sometimes there are folks in the states a little bit more entrepreneurial, but even so, I would guesstimate that at least 90 percent of Americans have never invested in a revenue property themselves either. So if 90 to 95 percent of the normal people outside of real estate investing, of the normal people that, you know, have never bought a revenue property and you've got one, two or three deals under your belt, you are light years ahead of them. And the analogy I like to use for this is kind of like if you remember way back when you're in kindergarten, age five, just going to school for the first time probably, and just kind of still having nap time and all that kind of stuff. If you're a kindergarten, the kid that was in grade two, so two years ahead of you seemed like they had it all together, right? That kid is already learning how to print, already knows how to print, probably start to learn how to write, already learning some basic arithmetic, addition and subtraction and all this kind of stuff. They seem so much smarter than you as a kindergarten kid. Well, that's the same thing with us and the vast majority of the people that we're probably going to be working with as our investor partners. They don't have any experience with real estate investing. So if you've got one, two or three successful deals under your belt, then you've already got your credibility. You've already got all the experience you need because you are light years ahead of the folks that you're going to be working with. All right. So a couple of things to take into account with. This is, first of all, all those really experienced guys and gals started out without any experience. All right. So they had to start somewhere just like you and I. And chances are, if they're working with other people's money, they started using other people's money a long time ago when they had a lot less experience than they have right now. So why not do the same thing? All right. We already talked about experience being relative, one or two deals. You're light years ahead of the average person. And here's another big one that you have to take into account, because you might be thinking, well, OK, well, Dave, here's me with three deals, two deals, one deal, whatever it is. Here's Joe Small. It's part of my real estate investment club with one hundred and twenty two deals. Why would my investor invest with me versus Joe Schmo? Well, here's a big reason. If you're focusing on the folks that I recommend that you focus on, you already have a preexisting relationship with your prospective investors. Joe Schmoe doesn't have that relationship. So in other words, these people already know you. They already like you. Now we just have to work on them trusting you, whether they trust you or not, with their money for investing in your deal. And again, with one, two or three deals under your belt, you've got enough experience. If you do this right, you can show them why they should trust you. Does that make sense? All right now. The other thing is, if you're really worried about this, these for your first couple of deals with investor partners, you can always tip the balance in their favor. What do I mean by that is quite, quite normally, especially with single family home type deals, the typical revenue split is like 50 50 50 percent for you as the active partner, 50 percent for your investor partners, as the passive partners. So they're bringing the money to the table. You're doing all the work. You share the profits, 50 50. Well, if you're really uptight about this for your first deal or two, you might do something different. You might say, hey, you know what? I've got some experience, but I'm not as experience as I'd like to be with this. And I'm really getting things rolling here. So because of that, I'm willing to provide you with more of the profits as a thank you for. Being my first investor, if you don't have to do that, but you want to do that, you can so you can tilt it in their favor. It could be 70 30, could be 60 40. For them, it could be seventy five, twenty five, whatever you feel comfortable with to get that first money partner deal on the go take. Well, hey there, thanks for tuning into the property profits podcast, if you like this episode. That's great. Please go ahead and subscribe on iTunes. Give us a good review. That would be awesome. I appreciate that. And if you're looking to attract investors and raise capital for your deals, that may invite you to get a complimentary copy of my newest book right back there. There it is, the money partner formula. You get a PDF version at investor attraction book, dot com again, investor attraction book, dot com ticker.