Matt Faircloth - Raising Private Capital: Building Your Real Estate Empire Using Other Peoples Money

RAISING PRIVATE CAPITAL

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Raising Private Capital
Matt Faircloth

Published by BiggerPockets Publishing LLC, Denver, CO
Copyright 2018 by Matt Faircloth.
All Rights Reserved.

Publishers Cataloging-in-Publication data
Names: Faircloth, Matt, author.
Title: Raising private capital : building your real estate empire using other peoples money / by Matt Faircloth.
Description: Includes bibliographical references. | Denver, CO : BiggerPockets Pub., 2018.
Identifiers: ISBN 978-1-947200-98-2 (pbk.) | 978-1-947200-04-3 (ebook) | LCCN 2018938234
Subjects: LCSH Real estate investment. | Real estate investment--Finance. | Mortgages. | Mortgage loans. | Venture capital. | BISAC BUSINESS & ECONOMICS / Real Estate / General
Classification: LCC HD1375 .F35 2018 | DDC 332.6/324--dc23

Published in the United States of America
10 9 8 7 6 5 4 3 2 1

Dedication

I dedicate this book to the person I dedicated my life to so many years ago. To my life partner, my best friend, and my love, my wife, Liz. There are just not enough words. Thank you for all that you are to me and to so many others.

TABLE OF CONTENTS

INTRODUCTION TO PRIVATE CAPITAL

PREREQUISITES BEFORE YOU START RAISING MONEY

THE DEAL PROVIDER

THE CASH PROVIDER

WHERE TO FIND CASH PROVIDERS

HOW TO TURN POTENTIAL INTO REALITY

HOW TO STRUCTURE THE PRIVATE LOAN DEAL

HOW TO STRUCTURE PRIVATE EQUITY DEALS

MANAGEMENT, EXITING, AND BEYOND

FOREWORD

by Joe Fairless,
Host of the Best Real Estate
Investing Advice Ever Show

Remember the scary thing you did that one time? And after you did it, it wasnt so scary anymore.

It was something that took a lot of courage, but darn it, you did it, and thank goodness you did! Maybe it was buying your first property. Maybe it was swimming from the shallow to the deep end. Or maybe it was finally asking out that good lookin guy or gal youd always had your eye on.

We are not human beings. We are human becomings. And I believe life is about how we continue to evolve through our experiences, using these experiences to continue to become a better version of ourselves so we can maximize our time on earth.

Take a moment to think about that scary experience you ultimately faced but worked up your nerve to push through and overcome. After you went through with it, I know for a fact at least these two things happened:

1. It opened up a new world of possibilities for you.

2. You didnt die. (Phew!)

Whether or not the experience ultimately worked out how you intended is another story, right? Sometimes we take a leap into something and it doesnt initially work out. But thats OK as long as we learn and grow from that experience and then apply those lessons to optimize future results.

So this raises the question, Why dont we jump into the deep end more often? If it opens up new possibilities for us, then why not always look for a deeper and deeper pool to do cannonballs in? Well, if we go diving in the deep end of a pool without first knowing how to swim, then thats going to be an issue. An issue for us and an issue for everyone around us.

Welcome to Raising Private Capital: Building Your Real Estate Empire Using Other Peoples Money. This book gives you the tools to learn how to properly raise money so you can grow your real estate empire while helping your passive investors achieve their financial goals. Without this book, raising money would be like doing a cannonball in the middle of the ocean during a tsunami. Not advisable.

So first, congrats on your purchase and your commitment to elevating your real estate game. But buyer, beware: With this book comes some serious responsibility. When you partner with passive investors, you are leveraging not just other peoples money. You are leveraging their time. And time is the most precious resource we have. It is limited, and we cant get back what we lose. That is why Matt has put so much emphasis in this book on protecting private money. Capital preservation is the most important part of partnering with passive investors. First, the focus should be on return of capital. Then on return on capital.

Ive interviewed investors during my podcast who have raised money from family members and lost it on a deal. Brothers and sisters didnt want to sit next to them at Thanksgiving. Lifelong friendships turned sour. We must avoid this by actively reading this book and applying its principles.

My suggestion to you as you read this game-changing book is to think about the dollars you raise from your passive investors in terms of time spent to acquire those dollars. Think about the time, effort, and sacrifices your passive investors undertook to earn that money that they are now going to trust you with in your deal. When we think about it in terms of time, not just money, it creates a clear picture of how important it is that we partner with investors only after we thoroughly understand how to protect their dollars.

After mastering that understanding and successfully partnering with passive investors, its highly likely your real estate business will reach heights ten times faster than what you previously thought. Ive seen this happen with my own company, Ashcroft Capital, and Ive seen it happen with Matts, the DeRosa Group. Matt and his wife, Liz, started with a $30,000 loan in Philadelphia in 2004. Fast-forward to today: They have completed more than $30 million in real estate transactions involving private capital. Think they would be where they are now if they had used just their own money?

The beauty of all of this is that the $30 million worth of transactions theyve done represents so many passive investors whose lives they have positively affected by earning them a return that they likely wouldnt have gotten in other types of investments. Raising money is a win-win-win game. Residents win because you buy properties and improve the quality of life at those properties. Your investors win because you give them good returns. And you and your family win because you grow your real estate portfolio to the next level.