3 Ways to Buy Apartments With Other People’s Money (Step-By-Step) – Capital Raises – Investment Banking
For the beginners in this video, I’m going to walk through what exactly a capital raise is. So a capital raise probably put is when you raise capital and there are different ways of doing this. You know, when it comes to raising capital, you either have equity or you have debts, whether depending on whether you’re getting a loan or whether you’re raising equity by selling parts of your business or new businesses you create for other people, you know, those are different ways you can raise capital.
It’s true. Real estate syndications. So real estate syndications are when you, it’s basically when you. Raise money so that you can make a larger down payment on a deal so that you can buy it. So let’s say you have an apartment and it costs 10 million dollars and you can’t afford it. Simply put, you raise money to put into the down payments because lenders will probably give you 75 percent of the buying price of the deal.
So you raise money to put into the down payment. The way to do that is to do an equity capital raise and what people would be selling is limited, usually it’s limited partnership units. Or they may sell corporation shares. So you buy the units or the shares via selling equity on a private placement basis.
This means that you’re not selling it on a, on an exchange anywhere. You know how the way you can buy apple stocks and every, anybody, anybody in their grand motor can buy apple stocks on a publicly listed exchange. So this is not what that is. This is more of a private placement. So you’re keep in. The share is private and you’re making sure that only people that are legally allowed to invest in private equity deals are able to do it.
And so there are a lot of rules and regulations when it comes to people who are able to buy, buy private equity deals. And one of these rules forces people to have to be something called accredited investors. In the United States, these are investors that at least have 200, 000 annual recurring income.
Or have net assets of at least 1 million. So the reason why these laws came into effect and these laws are also in Canada and they’re in, uh, similar laws are in United Kingdom and throughout the EU and different Commonwealth countries. And the reason why these laws exist is because there are a lot of people should invest in things that they can afford to lose if it doesn’t work out or be put at extremely high risk so that they invest in things that are not suitable for them.
So there are a lot of government agencies around the world that protects investment. So basically that’s one type of capital raise. So another type of real estate capital raise is when people create a real estate fund. So some people call it a blind pool fund or a search fund. But it’s basically when you raise capital to invest in anything that you want.
So let’s say you want to invest in properties that are really run down, class C, and then they are hotel properties. And then you want to fix them all up. But you want to get the money raised first before you go out and invest in the products. So basically, it’s when you raise the money to then deploy into these companies.
And so the way to do that, the way to raise money to invest in these deals beforehand, is the same thing. It’s when you raise funds by selling limited partnership units. Because all these funds, 99 percent of the time, are, all these funds are usually structured as limited partnerships. You know, sometimes they’re actually structured as corporations as well.
And so I guess another type of capital raise when it comes to people want to buy businesses are when people get asset based loans to get, you know, loans for the debt portion. Because when it comes to buying a business, there’s a debt portion and there’s sometimes the equity down payments sometimes. So if people want to raise money to buy a business, there are many types of loans.
Some people get an asset based loan. So let’s say you’re buying a company that has a lot of assets. A lender can actually look at the value of the target company. Are you looking to acquire? And based on the value of the assets, you may get a loan to be able to purchase it. You know, that’s one type of loan.
3 Ways to Buy Apartments With Other People’s Money (Step-By-Step) – Capital Raises – Investment Banking
Another type of loan may be a cash flow based loan. So if the target company is making a certain amount of cash flow, you may be able to get a loan to purchase it based on the cash flows that it’s generating, so that the cash flow of the company can pay back the loan. You know, another type of loan may be acquisition financing loans.
So let’s say the company that is buying the target company, let’s say I’m buying a… Carpet making company, really random. I know, you know, and then I established myself as a good candidates to buy the business. I have a lot of revenues and I have a good business plan. Then I may get an acquisition loan for my company to buy the carpet manufacturing company.
So that will be a loan to the acquiring company, not the target company, for example. And sometimes. You know, there may be seller financing. So sometimes the seller or the person who is selling the company may use the comp, the company’s profits to assist the potential buyer of the company to purchase that company.
So let’s say a company’s making a lot of profits. Basically the seller may use the revenues of its company to help the new buyer acquire the company. And these are where all the no money down deals come in and real estate has the same thing So those are just a few types of capital raises quote unquote And when it comes to capital raises Is this raising capital and so there are tons of other types of capital raises and i’ve just scratched the surface But when it comes to raising capital privately I’ve just gone through the, the narrow sheen of Kepler raises.
So if you want to learn more about how Kepler raising works, make sure that you head soon.
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