Mar 9, 2018
Do you want a cash flowing
portfolio that lets you live a life of freedom. But what if you
lack capital, time, and no idea where to start? Today, my guest is
Mike Zlotnik, who has experience raising private money, raising
OPM. He started out in software development. Since 2000, he has
been a real estate investor, and since 2009, a full-time fund
Most people don’t even know what
the process is to start a fund. It takes a lot of work to get one
set up, and Mike is already on his fourth! In this episode, we
discuss how to set up and get capital into a fund.
Topics on Today’s
up a financial vehicle, and develop an offering memorandum, term
sheet, and summary sheet of marketing materials - with these, you
can start raising capital.
do you raise capital? Start with friends and family. That’s the #1
step. They will put in whatever they can.
them to refer you to others who may have capital to invest.
Establish a network and build relationships.
they invest in your project, they can get a better return than in
the stock market with higher predictability and lower
- Masterminds are a great place to meet people,
- You’re never raising money for the sake of
money. You are trying to have people know, like, and trust
- Another option for raising capital is to have a
partner. Also, you can borrow your partner’s
you and your partner are complementary, you can move mountains and
the fund process is much easier.
multi-family space is suited for syndication. Mike’s job is to find
high-quality syndication projects with the right sponsors and
invest in them.
does a “Blind Pool,” which is not a specific property or deal, but
invests in “X,Y,Z.” He vets what he is going to invest in and can
find deals that others can’t.
forget to communicate and let others know about what you do and
your unique opportunity. You need to share your story.
is good at math and chess (he played competitively), but not so
much at sales. So, he is happy to share his wisdom...about
- Having a good, strong track record definitely
helps to raise capital.
questions about funds, cash flow, rate of return, etc. Mike has a
book that helps people learn how to invest in funds and
syndications. It is titled,
How to Choose a Smart Real
Estate Investment Fund.
you first start out and have a deal, most cannot bring that deal
home. They are unwilling to give up a piece to someone else, such
as a partner. Share the wealth until you gain enough experience to
be on your own.
need bank financing and a co-sponsor. If you’re raising equity, you
need to be able to go to the bank for loan approval.
- Elements of a Deal: the market, bank financing,
are two elements to financing a deal: 1) bank loan and 2) equity
you are trying to put a deal together, but don’t have all the
pieces, that’s ok. Realize that you need to be strategic on how and
who you bring into your deal.
- Mike’s crystal ball broke a while ago, so he
does not know the future. But you can prepare for it. Interest
rates are expected to rise. There might be a correction coming.
That doesn’t mean the market is going to crash.
the multi-family space, as interest rates rise, that creates some
buying opportunities and deals.
you buy affordable real estate, instead of the Taj Mahal, when
there is a downturn, people go for affordable. You don’t
necessarily buy for value, but for cash flow.
you want to write a book, don’t write it word for word. Outline
your chapters, and record your thoughts. Have them transcribed, and
you’ll have the words for your book!
Links and Resources
“That ability to aggregate
capital is what makes things good for us.” Corey
“You have many investors who put
their money into the fund, and the fund makes investments and pulls
their money to various investments.” Mike Zlotnik
“If you have a good structure,
if you have a good marketing business, you know how to find quality
deals, then you can partner with people who can raise capital.”
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Series, and if you like
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