Here’s what we cover:
- In this video, we walk through how a Raises.com member closed his first multi-million dollar multifamily syndication and is working on closing 100’s of units more
- How to deal with investors who back out last minute
- We talk about the challenges he faced in gaining investor commitment
- Why a capital call is ESSENTIAL in his case
- How to properly setup a capital call
- Why you should raise more capital than you think you need
- How to not lose your mind in this type of work
- How for new capital raisers, this is the clear path to set up a fund
- His experience with Raises.com
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Speaker1: [00:00:04] Well, you did it. You did it. So now. Now you’re. Now you’re one of the members that actually you’re like, now you can talk to other people that come in and train them and say, Oh, this is how you do it. You know, this is how it’s done. This is how you do this.
Speaker2: [00:00:16] Yeah, yeah, yeah. So, I mean, thank you for thank you guys. I mean, you guys were very instrumental and the feedback and all that, it really helped.
Speaker1: [00:00:37] Hi, Ade.
Speaker2: [00:00:38] Hi. I couldn’t hear anything. I thought probably talking and I can’t hear anything.
Speaker1: [00:00:44] No, all is. Well, we just had Kenneth is just because we just posted the meeting a bit late, but no, we just had Kenneth in yourself. So we got a few new, new members, but they’re not always on the call, so it’s a bit empty.
Speaker2: [00:00:59] Oh, I see. Well, got a bit of good news.
Speaker1: [00:01:06] There we go. Let’s hear it.
Speaker2: [00:01:07] Please. We need to close. No need. You have the money to close the transaction? Yeah. Yeah. It was a horrible experience dealing with some people. Yeah. I don’t know what is internal problem or just pure bad faith on their part. You know, dealing with how to deal with a lender that’s on the day of funding, changing all the terms. So, you know, all the times that, you know, we have to fight them saying, no way, you know, about this deal for the past six weeks and you made some approvals you can come and they are you expected to fund to start changing the terms and all that. Oh, they made us they made us sweat it acting for all sort of stuff that we’re not even the KPIs in the commitment letter that we signed but enough we managed to close on officially on Thursday, unofficially on Thursday, on Friday officially closed and congrats.
Speaker1: [00:02:27] So you closed on last Friday.
Speaker2: [00:02:29] Yeah, just last Friday. Just four days ago. Three days ago. Yeah.
Speaker1: [00:02:37] Congrats, man. You drinking champagne or what?
Speaker2: [00:02:41] Champagne at this point, I’m just trying to recover for from the sleepless nights. Wow. The champagne yet. But I need to close for money to close.
Speaker1: [00:02:58] Congratulations.
Speaker2: [00:03:00] Thanks. So the real work starts now.
Speaker1: [00:03:06] Yeah. Yeah, because. Well, yeah. Now, you know, we have to avoid the lawsuits and give the people what they want. Right.
Speaker2: [00:03:15] Well, to sign up for. Yes. Time to execute.
Speaker1: [00:03:21] Well. And so this one was 40. So this one was 44 to 44.
Speaker2: [00:03:25] Yeah. That’s 44 units. It was. Yeah, we managed to close down.
Speaker1: [00:03:36] Well, hey. Just one thing. One thing. A lot of people, a lot of us, business people, we’re always like. We always work really, really hard. And then we try to get to the goal. So now that you hit the goal, even for just. I know you can’t we can’t celebrate too, too much.
Speaker2: [00:03:50] But, you know.
Speaker1: [00:03:51] Yeah, I just hope you just you just take time, because, like, I’ve been seeing you working on this for a while. I just hope you take time to. You know, just to enjoy the moment for a bit.
Speaker2: [00:04:03] Yeah. That’s what I keep saying. Yeah, I will. But I’m off to I’m off to get in there. Innovation starts next week. Okay. So this week is just planning and next week we get to it. Of course, we have a renovation work plan in place already, but just been on ground and getting things moving from this to these.
Speaker1: [00:04:27] And then so then this one is your first indication as of now, right? Yeah.
Speaker2: [00:04:31] Yeah, it is. In North America. It is.
Speaker1: [00:04:34] Congratulations again.
Speaker2: [00:04:38] Thank you.
Speaker1: [00:04:40] So when it comes so then when it comes to actually the value add, so then what do you need any help with all those numbers, like taking a look at all that or what?
Speaker2: [00:04:55] I don’t know. Maybe yes or maybe no. I don’t know. I could always share with you guys and see if there’s any feedback.
Speaker1: [00:05:03] Got it. And what do you say you’re based out of you’re based out of Vancouver, right?
Speaker2: [00:05:08] Yeah. And the deal is in Edmonton, so just about an hour, 50 minute flight. Okay.
Speaker1: [00:05:20] Maybe. Maybe we can meet there with some time. What do you think?
Speaker2: [00:05:23] Yeah, absolutely. Absolutely. I’ll find out when.
Speaker1: [00:05:27] I don’t even know what I should like. I don’t know what I should come to because I want to make it like a round trip. Because there are a bunch of people that I want to meet in the States and then go up. I don’t know whether it should be Edmonton or Vancouver, but matters in Vancouver, so maybe it makes sense to go to Vancouver.
Speaker2: [00:05:43] Yeah. To meet your team. Yeah, yeah, yeah. Definitely not to come to Vancouver.
Speaker1: [00:05:50] Yeah.
Speaker2: [00:05:52] I do. Yeah.
Speaker1: [00:05:56] Yeah. I’ll plan. I’ll plan a time like I have to travel after travel is me anyway. So I’ll make a time in May, but then I’ll come back to you. But yeah, the deal is closed. Let’s just celebrate for 2 seconds and nothing crazy. Just, you know, just to see.
Speaker2: [00:06:13] Me off.
Speaker1: [00:06:14] And get back on it. Yeah.
Speaker2: [00:06:15] Because to gain traction with this close target for me to end this year is. Actually it’s 200 units. So we have about 1.56 to go. So that is a target. Okay.
Speaker1: [00:06:38] So 100 and so. So, can you expand that again? Say that again. I’ll make sure I get it.
Speaker2: [00:06:42] So I’m saying the target before the end of this quote by the end of this year is to own the unit.
Speaker1: [00:06:46] Okay.
Speaker2: [00:06:49] So we have one and then 56 units to go. So in several months. So. Got it. That goes. There has to be a commitment and there has to be a commitment 10 to 20% if you are really interested. So you know that when there’s the call to pay up or you lose your money because I have people, that’s okay. So commitment, I’m going to do 500, I’m going to do 200, blah, blah, blah. When it was time to copy that call. Oh, none which some of them were not picking up calls, some of them made commitments for 500 or 400 only did 50%. So at some point I thought I already raised millions and that million went from 1000000 to 300000 because I could only get 300. So that’s how I had so many issues. The deal is we close the model, so that was kind of called the cut. People were not paying up, but if they had something at stake to lose, which is a normal thing. If you look at it in private equity, if you make if you make a commitment to something that you’re going to you’re going to deploy capital, you have to make 5% or 10%. And when it’s time for capital call, if you don’t do it within the set time, you probably you’re going to lose that money. Does that’s defeat private equity outside what I’ve seen that we’ve done that before. So that is not, it’s not something new. Yeah. Well because you’re trying to manage relationships, right? You’re trying not to put people under a lot of pressure and telling them they’re going to lose their money they don’t commit. It’s entirely up to see. Okay, is this guy really interested? Somebody that’s really interested.
Speaker2: [00:08:40] And I’m I if I’m put in for instance and put in under a new deal does think it. I’m going to make a commitment. I’m not going to lose my ten or 20 kids. So they’re going to make that commitment. And what I’m saying, the big boys I’m talking to, institutional investors, for instance, they make commitment, okay? They want to invest. They make a commitment to a deal, let’s say 500 million. And they put in, let’s say 50 million, a hundred million right at the point of Colbyco, which is why when you make that commitment to a deal or to a private equity, that difference, that you’re not giving that to general partner at that point in time, that you only give 10% or 20%, you invest it in some kind of illiquid assets that when it’s time for capital call, you can get that money and just deploy. Right. You’re not putting in something hard and something that’s going to take you about 30 minutes or something that might take you about six months, four months for you to to liquidate or to get money back. So you put it in some kind of liquid asset. Was this 30 days for you to get the money back? So you made a commitment of, let’s say, a hundred million. Then you put in 10 million. Right. That balance, you put in some kind of liquid asset that you know that when it’s time for capital, because at this point where you’re depositing or deploying that 10%, which is but 10 million, you know, there’s going to be a cop that called in two months. Only if there’s no if there’s no deal in two months, then you get your money back. Less expenses.
Speaker1: [00:10:33] So. So you’re saying so basically. A few things. So one is that the capital call thing happens in every type of equity. Like many equity games, like big deal, small deals, whatever.
Speaker2: [00:10:43] Yeah. In the private equity side set up, that is the setting in a proper private equity. That is the setting. You have to put a commitment down that, okay, you’re committed to this deal. But because our relationship management is not it’s not about it’s not in the law that you have to do it. But if you truly committed to the deal and you want to if you want to establish or sorry, what is your position in that deal? Yeah. You make a commitment. Okay. I’m I’m in this deal. So under a million, I put it 10 million in first. So when it’s time for capital call, you get to $90. Yeah.
Speaker1: [00:11:28] Because and then you’re also saying so then you’re also saying to that the people have to be it has to be slightly liquid. So it has to be like, for example, if they pull out of the capital call, they still feel a little bit of pain because they still have to wait a while for for them to get that money right, is what you’re saying?
Speaker2: [00:11:46] Yeah. Okay. For instance, just under a million commitment to a deal. Yeah. Now you make it. You make sort commitments of 10 million or some level of commitment of 10 million. You know, there’s going to be a couple that call in two months for the balance. So at this point in time, you have to deploy. If you don’t have the if you don’t have the 90 right now, you must make sure that you have the 90. In two months when I’m going to make the cut. And it’s going to be about probably going to have like ten days or 15 days for you to deploy. If you don’t, because I need to close at that point, if you don’t deploy at that point in time, the likelihood of you losing the ten to the 10%, 10 million, 8% is pretty high. You can ask this from any, but it has done private equity at a big level. This guy’s done because everything is at risk. That 10 million, if you don’t deploy your 90 million, they have to quickly go to the market last minute and see who’s going to take up that 90 million. So that cost itself, that’s the cost that 10 million is going to cover for your other four and in most cases, at 10 million.
Speaker2: [00:13:05] Part of that terminal’s already been maybe deposits for that deal. Like in real estate, for instance, you have to make a commitment. Right, deposits for the deal that you’re trying to close. Yeah. Yeah. So that part of that money is probably going to go towards that. So if you don’t bring in your own balance, then there’s a huge pressure on the sponsor or the GP to look so that you don’t lose the money, the deposit already. So you have to go to the market at the last minute and you’re trying to raise money at the last minute is going to cause you to turn. It’s just going to cost you so much money. So much money. I’ve seen that happen on this deal. It cost me so much because I had to get get money at the last minute. So to do that, the private equity guys put in the documentations. If you don’t do it at this point, you’re going to lose your money. And you read the agreement. You sign up. Once you sign that, yes. You acknowledge that if you don’t. Put in there minimum balance. You’re going to lose your money. Pillows lies on your side. Yeah. You know what, Lloyd? You need the money.
Speaker1: [00:14:21] You know what’s funny? What’s really funny is like. Because, like, I’m in a group of so I’m in a group of like, there are a bunch of these these millionaire small business owners that they do like online. They do it. They have different online businesses. And what’s funny is like, for example, they’ll have a service that costs like 10,000 bucks or whatever and they would ask if the person is serious, but then the money is not coming yet. They would say, Oh, you put down $500 and come back. Like a down payment almost. But they won’t give back the down payments. It reminds me of this. It’s the same principle because they won’t give it up.
Speaker2: [00:14:56] It’s non-refundable.
Speaker1: [00:14:58] Yeah.
Speaker2: [00:15:00] You don’t follow through on your commitment to the deal that you’re going to buy their business. Wasted their time for about two or three months. And you don’t close the transaction, you lose the money.
Speaker1: [00:15:09] Yeah, and it reminds me of this because it reminds me of have you ever heard of that book influenced by Cialdini? I don’t know if you heard of that book.
Speaker2: [00:15:20] No, I don’t think so.
Speaker1: [00:15:22] Yeah, like, it’s. It talks about an influence. Cialdini.
Speaker2: [00:15:31] Cialdini sounds familiar
Speaker1: [00:15:33] Yeah, because. Yeah, because you’re using. You’re using the commitments and consistencies. So this is commitment and consistency that you’re using, right? Because you’re trying to say that if somebody made a basically if somebody makes a small choice, if somebody makes like a small commitment, then the people would continue to behave consistent with that small commitment. So I give you just say, oh, just let me just put $1 in. Then they say, okay, let me put ten. Like it’s easier to ask for bigger favors if the person starts with a small favor.
Speaker2: [00:16:03] Absolutely. And you know that people don’t want everyone. It’s just $1. People don’t want to lose it, right? Yeah. They would do whatever it is that is required of them to make sure that they meet up so they don’t lose that as small as it is, they don’t want to lose it. So they set it in a very bad position that, okay, yeah, there’s nothing I can do, I’ll just let go. So on the basis of that and the GP understands the situation and does not anybody can do it, if you have a discussion with the GP and see, okay, next, any expenses that the GP has incurred, you can give them some. So instead of 10 million back, probably get 5 million back on the relationship. But ordinarily they are not supposed to get anything back because you made a commitment. You see, you sign that if you don’t deploy the minimum balance, which is 90%, which equates to 90 million, you are going to lose your soft commitment to this deal. And when it says soft commitment really is not just the word of mouth. Yeah, it has to be with cash. That you actually really committed to this deal. But we have we have tried to massage that because everybody is trying to build relationship and try to tell soft commitment by word of mouth or the strong commitment that is going to. It really should be with cash.
Speaker1: [00:17:29] Yeah. Because not just talk. Because talk, talk cash is the only thing that’s cash is the only thing that shows what people are really going to do. It’s behavior. But one more question I have for this is would you so going forward for like your next syndications.
Speaker2: [00:17:45] Would you.
Speaker1: [00:17:46] Put in it looks like it makes sense to have a to get more people that are commitment committed than even the amount you’re raising. No, because.
Speaker2: [00:17:55] Absolutely. Absolutely. That’s a big lesson, that part of what I mean, Kenneth and Abdul would tell you, yeah, they’ve done all that. So that’s yeah, definitely I’m going to probably raise one point. I mean 11.5 X or two X or what I need. That’s what I’m going to get out. So it’s I’d rather have people have it do oversubscribed than to be on the subscribe because people just didn’t follow through on their commitments. Yeah.
Speaker1: [00:18:26] Because you know, and then maybe maybe to make some provisions for like if you’re because like people always want something that is hot, right? So it’s like if the thing is more in demand, if it’s oversubscribed and then you created value out of nothing.
Speaker2: [00:18:40] Give a lot of nothing. So you can quickly go to the market for the next deal. And so sorry guys couldn’t get on this one, but this you have an alternative. This is a new deal that you can, you know, so instead of you’re trying to make a commitment of 200 or 500 people, you only we only able to get up to 300 K. So don’t worry, the next deal is just erotic, blah, blah, and you can still make them invest in your next deal. Yeah, sure. Okay. Put them as a priority when it comes to the next deal. And they like your products, they like you first. I think they did not like a product. Yeah. You first before your product.
Speaker1: [00:19:26] Yeah. Because you know and speaking of the investors, the last thing I wanted to say is like how about how about I don’t know if this will help, but how about a press release just saying, hey, listen, you know, at a you know, so-and-so has done so-and-so and he’s working on this because I mean, the thing has closed and the thing is like.
Speaker2: [00:19:45] Yes, we are going to do that. I just well, I think yeah, probably in April. I just want to get it to the point where I started, you know, I just don’t want to close the transaction and okay, that’s the next thing I want to start reading before making so much noise about it. Yeah, definitely going to do that because it’s absolutely the profile. So I really appreciate any press release from you guys.
Speaker1: [00:20:15] In the noise. No worries. Yeah, we’ll take care of that. We’ll take care of those things. We’ll try to get on. We’ll try to get an editor to do it. We can’t promise like an editor would do it, but it may see access wire on it, but it would just get it to get it to Business Insider or something like that. Or Bloomberg.
Speaker2: [00:20:31] Or. Yeah. It’s a big do.
Speaker1: [00:20:42] Well, you did it. You did it. So now now you’re now you’re one of the members that actually you’re like, now you can talk to other people that come in and train them and say, Oh, this is how you do it. You know, this is how it’s done. This is how you do this.
Speaker2: [00:20:55] Yeah, yeah, yeah. So, I mean, thank you for thank you guys. I mean, you guys were very instrumental, the feedback and all that. It really helped.
Speaker1: [00:21:09] No worries. Listen, we did we did what we could. But the next one, we were always looking for ways to do more. Though I want to be able to do more. I know. I think I think I think there may be something with the ad thing. I think that there’s something there because.
Speaker2: [00:21:24] You know.
Speaker1: [00:21:26] I don’t think it’s been used enough by a lot of people. So but let’s keep on trying to improve. I want to I want to just find a way to get more. So if we can get more context to you.
Speaker2: [00:21:38] Yeah.
Speaker1: [00:21:39] We just want to find more ways to do it. So use us as much as you want. You know, you have the support, but I’ll be going back and forth on that.
Speaker2: [00:21:46] Email, so. Okay. Yeah.
Speaker1: [00:21:52] But. Yeah, don’t work too hard. Yeah. Just relax a bit and then just enjoy the moment. Life can be short sometimes, so just enjoy the moment. Make your investors happy and make them happy. We work on continuing to make you happy. And then? And then. That’s all we have to do, right?
Speaker2: [00:22:06] Yeah. Thank you.
Speaker1: [00:22:09] No worries, but. Yeah, next step. Next steps. Let’s. So in April, we’ll whatever you want us to say, we’ll try to get you on whatever Forbes anything. We’ll try to get you out there, and then we’ll have a draft by like a week. We’ll work on that. And then yeah, in May, I’ll see if I can personally come over. I will see if I can do that. I think there’s a 99% chance I can, but I’ll just confirm it.
Speaker2: [00:22:32] Okay? Yeah, that’s fine. Thank you.
Speaker1: [00:22:37] Very cool. All right, sir. Talk soon. Let us know if you need anything as well. Don’t be a stranger, right?
Speaker2: [00:22:42] Absolutely. Absolutely.
Speaker1: [00:22:44] Awesome. All right. Talk soon Ade, cheers,
Speaker2: [00:22:48] All right. Bye.