In this episode we look back at the fantastic interview I had with Brandon Turner from the Bigger Pockets podcast. What are the fundamentals of raising money and are you doing them correctly? Brandon is a master at this and takes us through the secrets of generating the capital needed for landing amazing deals. Brandon takes us through how to raise capital the smart way and kick off a real estate career with a head start. Yes, it's tough when starting out, but if you've got some great resources like this to use then it's going to make your life a hell of a lot easier (and more successful). There's some tricks in here... I BET you didn't know of. So jump in, hit subscribe to join the community, and boost your business knowledge today.
In this episode we look back at the fantastic interview I had with Brandon Turner from the Bigger Pockets podcast. What are the fundamentals of raising money and are you doing them correctly? Brandon is a master at this and takes us through the secrets of generating the capital needed for landing amazing deals.
Brandon takes us through how to raise capital the smart way and kick off a real estate career with a head start. Yes, it's tough when starting out, but if you've got some great resources like this to use then it's going to make your life a hell of a lot easier (and more successful). There's some tricks in here... I BET you didn't know of.
So jump in, hit subscribe to join the community, and boost your business knowledge today.
Matt: [00:00:01] Hi, everyone, this is Matt, the producer of The Investor Mindset Podcast and this week, we've got another amazing episode in the best off series. We're looking back at the interview that we had with Brandon Turner from the bigger pockets podcast. This is an amazing episode, if you're looking to get started or you want to improve your game.
INTRO: [00:00:30] This is The Investor Mindset Podcasts and I'm Steven Pesavento. For as long as I can remember, I've been obsessed with understanding how we can think better, how we can be better, and how we can do better. And each episode we explore lessons on motivation and mindset for the most successful real estate investors and entrepreneurs in the nation.
Steven: [00:00:51] I love that explanation of hustle knowledge and money because I think so often when people are getting started, they don't have money, and they don't have knowledge and they want to start out without wanting to do the hustle. And it's such a good reminder that if you don't have one of those two or one of those three, then you've got to think about something else to focus on.
Brandon: [00:01:12] Yeah, especially if you're listening to this right now and you don't have money yet focus on the knowledge and the hustle, focus on those two pieces because if you can bring those two pieces of the table, I can guarantee you will find somebody with some money who doesn't have the hustle or the knowledge. And then you will find that if you are hustling and have the knowledge and you know what you're doing. Case in point, a buddy of mine, I met him out here in Maui, he and I are now partners on a flipping business. We've done two flips this year already, made over 200 grand total on those flips. And like he hasn't put a diamond I mean nothing and no money and I put all the money in. But you know what I do on a typical day, not flipping houses, he deals with the contractors, he deals with finding the deals, he deals with everything. He's awesome. He's a rock star, but I put the money in. So again, we formed a partnership together because he couldn't do it alone and I wasn't going to do it alone because I didn't have the time and he didn't have the money. So why not do it together and you can create the magic. So yeah, if you're new, if you have no money, knowledge and hustle.
Steven: [00:02:03] I love that partnership perspective. Well, in just a second, we're going to get into talking a little bit about raising capital, because I know you've done it a lot of times in a variety of different sizes of deals. But tell us a little bit about what your current focus is on the real estate front. I know you're working with your new company, open door capital, and you're raising money for mobile home parks. Tell us a little bit more about that.
Brandon: [00:02:24] Yeah, so when I mentioned the flipping, what really the reason I flip houses is one because it's fun. But two, because I use the money from flipping to be able to hire team members for opener capital so we now have five people on staff. So we have five team members who are buying mobile home parks. We're buying mobile home parks across the country and not because mobile home parks are the end all, be all best investment ever made as much as I do like them and I can go through a million reasons why I like them. But it really was more important that I chose something even so many people are out there like they hear this and they hear this and hear this and at one point, I just had to say like, take my own advice and like Shut up, Brandon, just pick something and go with it with all your focus, all your drive, all your energy, and just do that. And so that's what I'm really most of my time is spent on open door capital, the mobile home park acquisition, and running business.
Steven: [00:03:12] Yeah, that's great to see your progress of growing into the commercial space. I mean, it's just so inspiring. I think a lot of people can really appreciate that. So when you get to the point, when you get to that point in your career, whether you're just getting started or you've been in it for a long time, like you have and you're making that transition into starting to raise capital for these kind of deals, you're going to bring multiple investors into a deal and you're going to do some type of syndication or some type of public offering. Where does somebody start as far as going out and raising capital? I mean, how should we be looking at this when we're going after bigger deals?
Brandon: [00:03:48] yeah, that's a great question. So the first thing is we want to raise money, you have to have that knowledge, like you have to know what you're doing, and you have to have the hustle. So if you're going back to what I call the deal delta, those three things, the knowledge, the hustle, and the money. If you're going to raise money, though, you need to have the other two dialed in, you really got to know what you're doing there. So that first part is again, if you haven't got that yet, you need to get that which means, you may have to start with smaller deals and you may have to do some smaller deals on your own, you may have to start and people might say why don't I have the money for the smaller deals, you may have to figure that out. You may have to bring in a partnership. I mean, you may have to imagine this. Imagine you spent the next five years of your life working 20 hours a week making no money at all in real estate all you were doing was building connections, knowledge, experience and confidence. There's like four things that everyone needs and the growth over time, like I said that you need experience, connections, knowledge and confidence, and you build those with every deal that you do. And so you may have to start small and let's say you were working for five years making no money just helping somebody else get their deals like you're just working for them for free. I'm not saying you should. I'm just saying what if you did, after five years, you've helped them by let's call it hundreds of deals or they flipped dozens of houses and you lost quote on quote, five years of your life. No, now you've got the experience to go raise money because you've been a part of all this stuff, I am not saying you have to do that but just hypothetically, like you may have to start at a level like that where you're working for someone or volunteering to be able to start building the credibility, the knowledge, the experience to be able to actually pull something off so that's the first thing. But really raising money, all comes down to really real calls, I think with two or three things. Number one people have to trust you, like trust is--it it's like three or three things. Number one, they have to trust you and when I say trust it's kind of similar to the word like, like they have to like you. If they don't like you, they're not going to put money with you most likely but really, the more important thing is trust, like there are just people that I don't like, but I trust somebody that I can give them money. But you have to build trust, how do you build trust, by credibility, by having a track record by doing this over and over and over, by always being a man or woman of your word. Like that's how you build trust over time. There's other ways to build trust, for example, podcasting, which is weird but you probably found this in your own life but by podcasting people naturally trust you more. And it might be silly but the fact is, like, you hear somebody over and over and over, you get to know them, you feel like you know them better. So maybe you're podcasting, maybe you're going on a podcast, and maybe you're speaking at local meet ups, maybe you're hosting a local meet up every single month in your market for the next two years to build that trust. So level one. So the first thing you have to have is trust. The second thing you have to have is a good deal. Like you're not going to raise money if you don't have a great deal. So what does that mean? It means you got to get really good at finding good deals, you got to get good at the acquisition, be good at underwriting the analysis parts, build up, funnel in good deals, so that you can bring your investors good returns. And then third awareness, people have to know what you're doing. You can have all the trust in the world, you get trustworthy people and have a great deal but if you don't tell anybody about it, you're never going to raise money. So really, all three of those things come into play when you're raising money; trust, deal and awareness. How do you do awareness? Again, the same things, go on podcasts, go to local meet ups, become a speaker at things, talk about it to everyone you know. You just gotta let the word out there that you are raising money or you are a money raiser. Now you'd be careful with that because you can violate some ACC rules if you're not careful. But yeah, those three things really is how you raise money; Trust, Deals and Awareness.
Steven: [00:07:15] Yeah, that's huge. And it's interesting when you say that because really building a thought leadership platform, whether that's through writing, whether that's through connecting in person at meetups, and speaking at those events, whether that's on podcasts, the first thing, of course, you have to be an expert, you have to have some expertise, or surround yourself with a team of experts so you can build that credibility on something. But by going and doing those things, it actually knocks out many of the things on the list, it might actually help you get a deal. Yeah, but for sure, it's going to help you build trust, and it's going to help you build awareness so that's huge. Once we've got that trust, and we've got people who really believe in us, they know that we're doing things the right way, they're seeing us on a regular basis so we're staying top of mine, and obviously, we've got a great deal, and we're starting kind of that down that process. What happens next? And how can we make sure that without a doubt, we're going to be able to close this round of funding? And there's not a question or mind that it's going to happen because I've heard people with great deals still sometimes can't raise the money.
Brandon: [00:08:21] Yeah, it's true. And especially in a time like this, where the world kind of is like a weird kind of what's going to happen next, where's the virus stuff going? There's a lot of uncertainty. So it's getting probably harder to raise money, though, we found in our business, that there's actually a lot of people that are--that we've actually raised more money, at least verbally in the past few weeks than we did before the virus, which is interesting. I'm thinking people are just terrified of the stock market so they're pulling out and they're giving it to us instead. But a lot of it comes down to having a lot of ducks in a row, like having your ducks in a row so there's the lawyer stuff, you got to have all the agreements that you have to have all that stuff lined up perfectly so that way you can handle those calls. We actually brought on a full time investor relations person because I knew that I didn't have time to deal with all the phone calls, I knew I'd have to deal with hundreds of potentially hundreds of investors. And so we brought in somebody that can just do that full time and just be able to handle that. So that was a big part of it. We do a lot of like--because sometimes we're raising money in a fund, for example, and if you're brand we fund, basically means as we raise a lot of money, and then we go buy multiple deals with that money rather than like one deal, one money raising. But a similar situation would be if you're just getting started and you don't have a deal yet but you want to start raising money, or at least start that conversation with people, you can put together like a sample deal. So this is what it looks like, this is the kind of deal we're looking for. That's kind of what we do in the fund. This is an example of what we're going to buy within the fund but we don't necessarily have one locked up yet that we're going to invest in so I can't give you all the details. So anyway, having those things in place definitely helps, again, having the lawyer stuff in place, having this software, there's a lot of different companies out there that will help you with the software side of things. And when I say software, I'm talking about where working investors login and upload all their documents, to where can they get the wiring information, where can they see the current value of their investment and all that is tracking, and there's different companies that do that. And so you'll want to have all that in place as well. But then at the end of day, sometimes it's just hard to raise money, sometimes you just don't have enough in your network and you may have to go outside your network to other people's network, and maybe even give away a chunk of your equity, to raise money. There's some people's jobs, if their whole businesses, they just go raise money for other people, which is not a bad business, I probably should have just, I'm glad I didn't, but like, I would have made probably more money by just going to other people who are doing big deals and been like, Hey, can I raise money for you, and then just bring in my name and my trust to other people's deals, my awareness, my trust to their deals. But it's not as fun as actually running the like, I'm going to go and take down that moose myself.
Steven: [00:10:46] Sure. And sometimes, maybe somebody like you, you want to have control, you've been doing this a long time, you've got that track record and you want to make sure you protect it. So I think that makes a lot of sense. And I kind of went down a similar path myself, I've been in the single family game for three years going on four, I've done over 200 deals, about half of those were flips and half of them wholesales. But I realized that okay, well, I'm not making cash flow by doing this transactional business, and how can I quickly get into a position where I'm going to do that. I could go buy rentals, single families, and pick off some from that space. Okay, well, that's an option too, done a little bit of that as well. But then I realized that, oh if I go and invest in large multifamily or large commercial assets, I can quickly move into that space, but I don't quite have the expertise, I have the awareness, and I have the trust, but I don't have the expertise to manage and operate that business. So what I went out and did was go find some other operators and build a long term relationship with them over time and understand and bet their deals, and then I can step into that role of investor relations and raise capital for them. And that is the kind of thing you have to be looking for in the world, then we can build/bring great returns for our investors, I get to focus on my core skill set, they get to focus on theirs, and then we all get to flourish together. That partnership might be the way that you as the listener might want to go down that path if you feel like you've got something to bring to the table, go find somebody you can work with.
Brandon: [00:12:17] Yeah, you said two really, really good things in there that I want to point out a lot I'm switching now, I'm now I'm like the interviewer here. So two things that I love that you said number one, you said, "You vet and understand their deals". That's so important because as we talked about earlier, trust matters so much. So if you're just going to go raise money for somebody, and you don't know anything about their deals, you're just hoping they're going to be good. If that deal goes south, your name, your trust is going to be heard. So I love that you said you vet and understand they're like, you're putting your name on the line so you better understand what you're getting into. And then the second thing you said was your unique skill set, right? So there are things that everyone is good at. Like my guy, Mike was my Investor Relations guy that I brought in, like Mike is the happiest, personable, like friendly, amazing guy. Like everybody loves Mike, they just love you. You talk to him for one minute and you're like, this is the best guy I've ever known. And so like he's the best relationship because he's so good at that. And he likes to get on the phone and talk with people. I hate the phone, like if you--like people who know me well know that I do not answer my phone. If you call I will not answer ever. I have my voicemail literally turned off. You can't leave me a message. The only way to get in touch with me is by texting me. I just hate the phone but Mike loves a phone. So guess what? Mike's Investor Relations, not me. But you know what I like doing. I like podcasting. I love this. I love talking on podcasts. Is that weird? I like podcasts, but not phones, I don't know. It's like, what's the difference? You and I are talking the same way. But there's something different about this, right? So what do I do? I'm the awareness guy, I go out there and I give awareness out there and what we're doing and why we're doing it. I write books, I do that kind of stuff. My asset manager and one of my partners, Brian Murray, guys are rock stars, bought 1000s of units in his life. He is really good at Asset Management, making properties that aren't performing well perform really well. So the point you made was just put people in the roles that they are born to do and you're going to see your business just fly. I mean, that's probably the biggest reason for all the success we've had the past year and the growth we've seen. We were at--we started a year ago, we had basically opened our capital, we had no properties a year ago. We have I think six right now and like 600 units, we're under contract for another couple 100 units we should be at--we're going to be at, I know we're going to be at over 1000 by the end of the year. And so like, where does that come from? It comes from having the right people on the bus and in the right seats to use a I think Jim Collins, that's the Jim Collins thing. Get people on the bus, the right people on the bus and get them in the right seat.
OUTRO: [00:14:38] Thank you for listening to The Investor Mindset Podcast. If you like what you heard, make sure to rate, review, subscribe and share with a friend. Head over to theinvestormindset.com to join the insider club, where we share tools and strategies from the top investors and entrepreneurs and how to take it to the next level.