Insider Secrets Podcast Season 2, Episode 29
Guest: Mike Morawski
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Guest Bio:
Mike Morawski brings over three decades of expertise in real estate investment, having managed transactions totaling more than $405 million. As a seasoned entrepreneur, author, real estate educator, public speaker, personal coach, and the Chief Investment Officer of a multifamily hedge fund, Mike’s career is built on personal resilience and a commitment to helping others achieve remarkable success in their lives. He has mentored hundreds of real estate investors, guiding them to reach their goals.
Mike’s journey began as a general contractor in Chicago’s Northwest Suburbs, where he built a business generating $5 million in annual revenue before selling it. Transitioning into real estate, he quickly established himself as a top sales agent, forming a team that consistently achieved over $20 million in annual sales. In 2005, Mike launched a private equity firm, raising $18 million and acquiring $60 million in multifamily properties, encompassing 4,000 units across five U.S. markets.
Today, Mike is passionate about sharing his wealth of knowledge and experience with others. He hosts the Insider Secrets Podcast and co-hosts the Multifamily Unplugged Vidcast. Through his platform, My Core Intentions, Mike offers training and coaching to real estate investors and industry professionals, teaching them how to generate short-term cash flow and build long-term wealth. His approach includes live and virtual training sessions, along with three levels of personal coaching.
What sets My Core Intentions apart is the focus on developing exit strategies and creating wealth through small multifamily properties. Mike’s clients are completing deals within 12 weeks and achieving business growth exceeding 20% annually. My Core Intentions helps clients set high standards in both their personal and professional lives, enabling them to realign with their core values, such as family and personal development. Mike’s guidance helps clients uncover their true passions, leading to a balanced and fulfilling lifestyle.
https://youtu.be/vAiKpQQLKdQ
SHOWNOTES
Key Takeaways
Assembling a knowledgeable and trustworthy team is essential for navigating the complexities of real estate syndication and investment.
Evaluating risks associated with multifamily properties, such as market fluctuations and property management issues, is vital for protecting investments.
Understanding the capital stack is crucial, as it explains how different levels of financing work together in a multifamily deal.
Establishing a property-level LLC adds a layer of protection by separating the investor from the property.
Regular updates and transparent communication with investors build trust and foster long-term relationships.
Profits in real estate come from rental income, property appreciation, and tax benefits from depreciation.
Standout Quotes
“The beauty of multifamily investing is that it’s a predictable investment. You can project your cash flow based on the numbers.” – Mike Morawski
“Every deal comes with its own risks. The key is to identify and mitigate those risks effectively.” – Mike Morawski
“Investing in real estate is a journey of learning; the more you know, the better your decisions will be.” – Mike Morawski
“Networking isn’t just about what you can get; it’s about what you can give to others in the industry.” – Mike Morawski
“You always want to have 1 to 2 arm’s length of protection from you and that property.” – Mike Morawski
“You have to get paid for what you do. This is a business where you eat what you kill.” – Mike Morawski
Episode Timeline
[0:00 – 2:30] Introduction to Multifamily Investing and Why It’s a Predictable Asset Class
[2:30 – 5:45] The Importance of Building a Team for Success in Real Estate Syndication
[5:45 – 9:15] Understanding the Capital Stack and Leveraging OPM (Other People’s Money)
[9:15 – 12:40] Identifying and Mitigating Risks in Multifamily Investments.
[12:40 – 16:20] Legal Structures: LLCs, SEC Compliance, and Protecting Investors
[16:20 – 19:50] How Sponsors Earn Fees and Ensure Profits for Investors
[19:50 – 23:10] Networking and Building Relationships in the Real Estate Industry
[23:10 – 26:45] Continuous Learning and the Long-Term Wealth Creation Journey in Real Estate
Contact
Website: https://mikemorawski.com
Email: mike@mikemorawski.com
TRANSCRIPT
Kristen: [00:00:00] Welcome to this edition of Insider Secrets, the weekly podcast that turns real estate investing goals into reality. Each show we interview guests who are seasoned real estate professionals, actively closing and managing real estate deals. Mike is the founder of My Core Intentions and would like to help you make your real estate Real estate investing dreams a reality.
Mike coaches you to buy investment real estate, creating short term cashflow and long term wealth. Your host and real estate coach, Mike Morawski, has more than 30 years of real estate investing and property management experience. Here’s your host, Mike.
Mike Morawski: Hey, welcome back everybody to this week’s podcast. I’m Mike Morawski. And today I’m going to be sharing with you the Anatomy of a Syndication. Hey, before we get into it, let me tell you a quick story. I’ve been in the real estate space for 30 years. And what’s interesting is I spent the first 12, 13 years of my career as a residential real estate agent.
So I sold residential real estate, [00:01:00] built a big team selling about 125 listings a year. I had done a lot of work previously when I was in the construction business for a couple of large syndicators, apartment syndicators in the Chicago market, and I had always understood the model or thought I understood the model.
Simple premise was find a great piece of real estate, marry it with private equity from other people that want to invest, stay in the middle, and that’s how you build a syndication. Well, I understood that basic premise. But there was a lot more that I needed to learn along the way. So today, what we’re going to do is I’m going to break down the anatomy of a multifamily syndication for you.
So we’re going to cover a lot of ground. If you’re driving, make sure that you take some time to pull over, maybe take some notes or go back and listen to this later. If you’re somewhere that you can take some notes. We’re going to give you a lot of information here today for you to take those notes.
So before we jump in, I want you to understand that part of this [00:02:00] process is the underwriting process. And when you get into that underwriting process, you’re gonna go and really that’s where you’re gonna design your plan. You’re gonna design the business plan, the structure for the syndication, How you’re going to raise capital, all the legal entities and all of that is going to be developed because of the underwriting process.
So I’m going to dive right in. We’re going to talk about underwriting at another time, and you can follow along in the process. But I really believe that upfront understanding how a syndication works, how it’s broken out who is who, what is what, really makes a lot of sense. So I’m going to start with what is a real estate syndication.
As I said, as I thought it was just raising private equity, marrying it with a great real estate deal, staying in the middle, splitting the returns with the investors and managing and operating the property along the way, in essence, that’s really what it is.
But, the true definition, and this comes from Webster’s, a real estate [00:03:00] syndication is formed when a group of individuals or companies pull resources, time and money together to transact a specific business to pursue or promote shared interest in a specific piece of real estate property. A syndication is a joint venture, an LLC with multiple members working together as a management team to pool capital, human and financial resources together, which include private and passive investors.
So really, boy, there’s a mouthful there, but that came right out of Webster’s dictionary. The entire object of a syndication is to acquire, operate, improve, and ultimately dispose off a property in order to generate a profit. A syndication may be formed to buy a single property or multiple properties in a portfolio, as well as even a blind pool.
So you could do a fund, you could raise money in a fund and deploy that money into different syndications. Syndications are basically created so you can legally ask investors for money to fund their deals. So we’re going to [00:04:00] talk about all those legal aspects also along the way.
When I did my first syndication, that is really all I knew. I learned the rest by taking the next step, by asking a lot of questions. My attorney got me up to speed pretty quickly. I learned how to raise money pretty quickly. My broker helped me build a great model and some systems and trust me, I stumbled along the way.
Let me talk about raising capital upfront. And I believe that as a syndicator, as a multifamily operator, you need to be raising capital right away from the first day you decide, Hey, I’m going to be a real estate investor. Start talking to people about what you’re doing. So, my first deal was an 11 unit apartment building, and I was so excited.
I put this thing under contract and that the seller was going to sell it to me. And after signing the contract, I got back in the car and I realized. Oh my God, how am I going to pay for it? Where’s the money going to come from? Well, this is years ago. This is like 2005, during which time there were still local newspapers where you could put classified ads in the newspaper.
And I don’t know that this [00:05:00] process could be duplicated today, but what I did was I went and I spent $45 on a little three line ad that ran for about six days. And all it said was real estate investors wanted. And my phone number. Well, my phone rang off the hook for about the next 10 days. I ultimately wound up raising about $700, 000 over the next six or seven months and was able to do my first two syndications.
It was interesting that you had the ability to utilize something like that, but I have to tell you, that was the best $45 I ever spent. So there’s a lot of different systems out there today for you to raise capital. There’s a lot of different processes. And I really believe that you can raise capital in different arenas, and using different tools.
I look at it like being a fisherman. If you’re out fishing and you may or may not be a fisherman. I’m not. I just use the analogy is that if you have 1 line in the water, you’ll catch one fish, but if you have five or six or seven lines in the water, you’re going to catch multiple fish. [00:06:00] So how many lines can you put in the water?
There’s lead magnets, there’s social media, there’s email marketing, there’s telephone calls, there’s direct mail. There’s a number of sources that you can be using to attract private capital. There’s different ways when we’re raising capital to where money comes from. So private capital in the beginning might be friends and family that you’re raising capital from. You could go outside of that circle of friends and family to other people that you know, but then as you grow and as your business grows and you start managing other units, there’s other sources of money out there.
There’s insurance companies and pension funds and unions and endowments. There’s a lot of different kinds of family offices and institutional money out there. So keep that in mind for yourself for later on. Now, why do you want to do a syndication? Well, you might want to do a syndication because you have an outstanding deal. You have a deal that is just a great opportunity. You don’t have all the money. You’ve burned through all of your potential resources, but now [00:07:00] you want to expand your portfolio and you want to bring other people in. An outstanding deal will help you do that.
You have money, maybe you have some money, but you have no experience. So now you got to put a team together. People that know how to do it. You also want to do a syndication because of the economies of scale. On your own, you can maybe only buy a few units, with team members, with the economies of scale, now you can grow your portfolio and have a lot more units under management.
A syndication provides cash flow. And you should look at your real estate purchase today, your syndication today as that cash flow stream of cash flow for yourself. The next thing that it does is it provides long term wealth. So any syndication you put together should have both sides of the aisle. You should be able to provide cashflow along the way, and you should be able to provide some long term wealth.
So, when you sell the property, you have the ability to capitalize on future income. And then tax advantages. A lot of investors, especially when you start to get a little bit later in the year after [00:08:00] June, July into the 3rd and 4th quarter of a year, a lot of investors start wondering about tax planning. How am I going to save? How am I going to strategize? How am I going to spend less on taxes?
So, syndications also give you the ability for that. And then one last thing is you can close more deals. So as an operator, you have the ability to close more deals, and that will help you build your portfolio. So what I’m going to do now is I’m going to jump over and share my screen. And in sharing my screen, I want to give you the opportunity just to kind of take a look at some things as I go along with them here.
So there we go. Let me jump right into the agenda here. In the agenda, though, we’re going to talk about the structure and the process. Today’s really designed for the entry level investor. Somebody maybe between curious and qualified, but even the season investor could pick some tips or some techniques up. I have been doing this 30 years. I still go to a lot of events, a lot of live events, online events, because I’m always learning. So we’re going [00:09:00] to talk about the structure and the process.
We’re going to talk about the entity itself. What the legal structure should look like, and then what the business deal should look like. We’re going to talk about fees and splits for the sponsor. And we are going to talk about how those work for you, because as a sponsor, you need to get paid for what you do.
So one thing I always like to talk about is why do I do this? Well, there is a sense of financial wealth around syndicating multifamily. I read a book years ago by Gary Keller. Gary Keller is one of the founders of Keller Williams Real Estate. And in that book, when you open it, it was called The Millionaire Real Estate Investor was the name of the book. And really a great book. You should probably read it if you haven’t. But what it does is it gives you a lot of basis around real estate investing.
But when you open the book, the first thing Gary Keller talks about is financial wealth. What’s financial wealth? Well, it’s the unearned income to finance your life’s mission without ever having to have to work. Now, isn’t that great? How would you like to finance your life’s mission and [00:10:00] not have to work? When you look at what syndications do for you, and they provide that cash flow, so it gives you additional immediate income or build your retirement account and then long term wealth. Then you have built future wealth for tomorrow as you start to cycle out of these syndications when you’ve taken depreciation and it’s time to sell and move on to the next opportunity.
This happens to be one of the properties that I’ve owned over the years. I really like this picture just because of that, but we’re going to tear apart a lot of items with inside the syndication. Remember early on, I talked about underwriting, before we get into a couple of sessions on underwriting and those fundamentals, I want you to really understand the purpose behind the syndication. Once you underwrite a deal, you look at it, your next step is going to be to write an LOI, a letter of intent. To go to contract, to purchase that property.
And then you’re going to do all of the due diligence. And there’s a lot of timelines within that due diligence process that you’re going to have to follow. But that kind of brings you right up to [00:11:00] speed as continuing on this anatomy of a syndication. Now we need to look at the company structure first. When we look at the company structure, you’re going to have an LLC. That LLC is where all of your private investors, all the general partners are going to be part of that LLC.
You’re also going to have a property level LLC. So the LLC that you create as a master LLC is now going to go buy the property, but that property is going to be its own entity. So, I’m hoping that that makes sense for you. So you always want to have 1 to 2 arms length of protection from you and that property. And you do that by having your corporate structure and that could be ABC equity fund and they go and buy ABC, Apple, orchard, apartments. And there are 2 separate entities.
But then we have to look at the legal structure for raising capital. Every time you raise capital, you need to make sure that you’re offering your LLC is registered with the SEC. The Securities and Exchange Commission, they’re our [00:12:00] governing body. When we raise capital, we’re held at a much higher level. We’re scrutinized a lot more. So you have to watch that along the way.
But a couple of legal documents that are going to be put in place after your LLC agreements are going to be a PPM. That’s a private placement memorandum. It’s a subscription agreement. This is what your investors will sign. And this dictates the flow of money. So how that looks is that they bring in a hundred thousand dollars. And this is how that money gets paid back. They get a preferred return along the way. They get their original principle paid back upon sale. And then they get a promote or the profit on the backend.
The next thing after all of the documents are set up is you’re going to want to set up an investor portal. We use a company called invest next. And it’s a great portal that gives us the ability to put all of our underwriting, all of our documentation, all of our legal agreements, any webinars that we might do, our slide deck on the property all on that portal. We can put a rent rolls, T12, the trailing 12 months in order [00:13:00] to provide that information, be very transparent for the investors. And then just make sure you go back on invest next and you update those documents as you’re going through the process. And then, the business structure itself. So, when we start to talk about the business deal, your typical syndication is split into a 70/30 split.
70%, the lion’s portion goes to your private investors and 30 percent is for the GP side. There’s different ways you can structure these. You can do 60/40, you can do 80/20, but 70/30 tends to be the sweet spot that really works for putting these together. I always make sure that when I put a deal together and I bring it to the market, that I’m going to be able to hit a mid teams return or higher for my investors.
So when I’m underwriting, if I don’t see 15 percent IRR back to my investors or more, it’s not really even a deal that I want to do. Because I need to be able to provide seven to 8 percent cashflow along the way for my investors as well. I always put my investors first. I think of them first, [00:14:00] and I’m very transparent because I want to make sure that they have a great experience. The better experience they have with us as a syndicator, the better opportunity that we have to raise more money on future deals with them.
Now, in putting a syndication together, one of the things I want you to think about is buying the property right. And then being able to pay it down using OPM, other people’s money along the way. This comes down to collecting rents from tenants and being able to use the OPM from tenants to pay your bills, pay your mortgage, pay down the mortgage, increase the cashflow, decrease the expenses, and provide that rate of return back to the investors.
So let’s jump back, talk about the 70/30 split a little bit. As I mentioned, that 30 percent side is generally for the GP. The general partners, the sponsorship team. If you’re an underwriter and you go out and underwrite a deal, you find it, you find some other people that become part of your team. You bring that to the market for your individual investors. You’re on that 30 [00:15:00] percent side.
Maybe you’re a capital raiser and you are joining a deal team to help raise capital on that. But let’s talk a little bit more about who’s involved and what the sponsor does. Your typical sponsor or GP finds a deal. They find it, they do all of the due diligence. They put it under contract and then they kind of do the initial evaluation. Once you go to contract, now you’re going to do the due diligence. Your GP is also going to do all of the funding. They’re going to take care of the financing and build out the capital stack.
The capital stack is that place where you have your debt, financing, your equity, maybe some preferred equity, which we’ll get into in the finance financing section later on. And then they do all of the property management and asset management around the property. Your LPs, your limited partners, they’re the 70% side of any deal, or the 80% or the 60%, but that’s the state that they hold. They get the lion’s share of the returns because that’s how you deliver the best returns back to them.
What the LP has to do is they really have to [00:16:00] vet the sponsor, make sure that they’re comfortable with and confident in the sponsor’s ability to perform at the level to provide the returns. They have to execute their paperwork, and then they have to fund their account and fund the deal. And then they kind of sit back and get mailbox money. They collect some returns.
Let’s talk about the SEC for a minute. SEC is that governing body where we create all of our legal structures with our attorneys. And I always suggest have two different attorneys. You wanna have an attorney that’s a securities attorney that deals directly with the SEC that knows how to file that paperwork.
General business attorney just doesn’t have the bandwidth to be able to do that. So that’s why you wanna find a good SEC attorney, but you file your paperwork with the SEC. You have two types of opportunities that you could bring out there. You could bring a 506B, which is for non accredited investors, or a 506C, which is for accredited investors.
Now, what’s the difference between accredited and non accredited? Accredited investor falls into one of two buckets. [00:17:00] That first bucket is they have a million dollars in net worth excluding their personal residence. Or, if they’re single, they’ve earned two hundred thousand dollars the last two years or if they’re married they’ve earned three hundred thousand dollars combined income the last two years.
That’s what qualifies somebody to be accredited or non accredited. You always want to make sure that you are asking your investors or potential investors if they are accredited or non accredited. A 506B is for non accredited investors. You can’t publicly advertise or market this property. It has to have a personal relationship previously with that potential investor.
And you have to talk to them about the deal. So, as I said, you can’t send emails to them to introduce it, or you can’t advertise on social media. A 506C though, is different. You have the ability to publicly advertise, publicly market the property and bring it out to anybody you don’t know.
Now, in a 506B, you can [00:18:00] take in accredited investors as well as non-accredited. But in a 506C you can only bring in accredited investors. A couple other structures to accept other kind of funding is a DST. It’s a Delaware Statutory Trust, or a TI, it’s Tenants in Common. This structure set up properly will allow you to bring in investors that have 1031 money.
Now remember, 1031 money is the rollover of all of their gains from a sale of a like kind property directing it into another property. They don’t pay capital gains taxes on it today. It kind of kicked the can down the road. So those are some of the structures. If you have questions on any of this too, you can always reach out to me. Send me an email. Just give me a phone call. I’m more than happy to answer any of these questions for you that you might have after this.
These deals are all typically set up in the LLC, the Limited Liability Corporation. The LPs typically in that LLC are class A shareholders. Class A shareholders get all of the first. They get [00:19:00] the first preferred return. They get the first of their capital paid back. They get the first of the promote or those profits. The GP is typically class B shares. They get everything after that. However, it’s split.
So let’s just talk about preferred return for a minute. Preferred return is that return that we promise investors as a cash flow, paying them 7 or 8 percent on an annual basis. Now, what that might look like is, let’s say that I’m paying my preferred return of 7 percent to my investors. Well, anything that comes in in cash flow over 7 percent would get split 70/30 between the LPs and the GPs. So it’s sort of a quasi waterfall. It’s not a full waterfall. A waterfall is when we have different levels of payments inside of a syndication, which I’m not going to get into that because we could complicate things a lot today by going into that. But we will talk about that in a future podcast though.
[00:20:00] Now, if you’re an LP and you’re looking for a deal, here’s how to find a sponsor. Take a look at the sponsor’s track record. What do they have under management? How have they performed? How are they performing today? Today we’re in a good environment that there’s a lot of capital calls. There’s distress on properties. How is that operator or GP responding to that? What’s their market cycle experience? Have they been in down market cycles before? Have they cycled out of deals? What’s their returns been in a down cycle? What’s your risk evaluation as an LP? What do you want to see as a return?
And what can you live with and can live without? So what’s your risk evaluation? And then assess that against what the GP’s risk evaluation is. Communication is extremely important. What’s the sponsor’s communication? I know as a group, what we do is every 30 days, our LPs get a email newsletter just saying, here’s what we’ve done the last 30 days.
Here’s where the finances are. Here’s where the occupancy is. [00:21:00] And this is our plan for the next month. Once a quarter, we do a quarterly update. We jump on Zoom. We get all of our investors together. We tell them what we’ve done the last 90 days. We show financials. We’re extremely transparent and we’re in an environment that you have to be transparent in today.
And then what are the tax strategies? As an LP, if you’re looking for tax breaks or tax bonuses, find out what the GP will offer for you. And then also ask how much skin in the game does the GP team have? How much earnest money, how much at risk money, where will they be when the deal sells? Now, how do you find sponsors? You know what? There’s a lot of sponsors out there. You’ll find them on social media. You’ll get email blasts. Once you get on a list, you’re going to get all kinds of information. But build a relationship with the sponsors that you’re going to invest with. Build a relationship based on performance and what you’re going to be able to receive from that sponsor and from that deal.
Now, we’re going to look at how the sponsor team works. So the sponsorship of a deal which is that class B share that 30 [00:22:00] percent side, you have to look at this as a business deal, not just you, but with your team. But you’re going to have a lead sponsor. They’re the ones that put the deal together, underwrite it, find it, bring it to the market. But then that sponsorship team might not qualify enough to finance that property themselves.
So they might need to go get a key principal, a KP. This is somebody who has a net worth, has a good balance sheet, has a track record with lenders, has units under management, and they can sign on a loan. You might need somebody then to be part of the team that can bring earnest money, EMD, or at risk money. At risk money might be your loan application fees, your cost segregation fees, different fees and structures like that that will help you fund the deal early on.
And then compliance, I’ve a partner that is great. All Rochelle does is work on compliance stuff. Make sure that the funding is done. Make sure the insurance is in place. Make sure that we have all the documentation and paperwork from asset management and property management teams. Make sure that our marketing is in place. [00:23:00] Make sure that our investor portal’s updated and all of our legal and security documents are updated.
That’s that compliance piece that takes a lot of time. It’s time consuming. So have somebody on your team that good at that type of detail and can handle that. Maybe you have an underwriting team on your team. Maybe they’re the ones that find the deal, locate it, underwrite it, do the due diligence.
And then there’s capital raising teams. But this is different ways that these sponsorship deals can be split up. Then what you determine is how do you split up that 30 percent side. How does that become part of that 30 percent side and how do you look at building that team?
We will go on here. I want to talk about the equity portion. We talked about cashflow a minute ago. Let’s talk about that back end profit, the promote, the equity side. Again, you’ve bought a great real estate deal. You bought it right. And let me go back and share my screen again. You can see how that equity builds up.[00:24:00]
When you first buy that deal, you’ve got a big debt portion. Very little investment, very little equity. But over time as OPM other people’s money is paying down the mortgage, you’re building equity, your debt is shrinking, your investment always stays the same, but your equity increases. Now what I want you to think about down the line, where can you maybe refinance a deal, pull some equity out.
Return the initial investment and now only have debt and equity in these places. So these are things to think about along the way when you’re syndicating these deals. Two important metrics in real estate investing is, the equity built up as part of the return and the long term effects of investing in real estate that you provide for others.
So we profit from the rental income, the appreciation. Whether that appreciation is organic just from time or forced because we’ve gone in and done capital improvements on a property. That depreciation or appreciation is really what drives the value of the property. And [00:25:00] then there’s depreciation, which is the third place of profit, and that’s part of those tax planning strategies.
But depreciation offsets the passive income that comes from properties. So, your typical syndication now, and the fees that come out of a typical syndication for a sponsor are your acquisition fee. For putting this together, for underwriting it, for bringing it to the table, you need to get paid for what you do.
We underwrote 90 transactions at one point. It was over a billion dollars in property values. And we underwrote 90, never quit. If we would have quit the 91st deal that we underwrote, we wouldn’t have bought. Because we wouldn’t have find it. So you have to dig through a lot of rocks. So when you do get paid, we want to make sure that we get that acquisition fee after we raise all the capital, after we’ve brought the deal to the market.
And we have investors investing and we’ve closed down that property. Acquisition fee typically can range somewhere between 1 to 3%, depending on the size of the deal and how much weight you can [00:26:00] put on those fees for the sponsorship team. There’s an underwriting fee that we typically put in our deals. That underwriting fee pays us for doing that piece of the work, doing the due diligence.
There’s a lot of time and effort for a sponsorship team that goes into this. Again, you have to get paid. And remember, this is a business that you eat what you kill. And that means if you don’t close, you don’t get paid. And then there’s construction management fees. You can add maybe a 5 percent construction management fee to the total capital improvement costs, because you’re going to manage that. You’re going to talk to contractors every day. You’re going to look at pictures and you are going to make sure that those repairs are done.
You’re going to do inspections. You have to get paid for that one to two hours, maybe sometimes a day, especially early on with a value add property. Then you get paid for asset management. I always look at property management. Asset management is three levels. Maybe you have a property that you have on site staff, your leasing agent, your maintenance people, but then you have a property management company, third party that manages those people.
[00:27:00] And then asset management manages both of those levels. Again, this is weekly calls. This could be daily activities with property managers and team members, but get an asset management fee. And then a disposition fee. This is when we sell the property. And then the promote, that promote is that backend profit.
When you bring an offer to the market, what you want to be able to do is you want to be able to provide for that investor a couple of different things, an offering memorandum, a slide deck. You’re going to put together a pitch deck. It’s going to talk about your team. It’s going to talk about the property.
It’s going to talk about the market. It’s going to show some financials in it. And then it’s going to talk about the profitability that the investor can see. So you want to put all those functions into your slide deck. And then you’re going to take that slide deck and you’re going to go do a webinar and you’re going to invite investors to that webinar.
And you’re going to talk about the deal and pitch your deal. And then those documents will get put up on your investor portal. You’re going to have then your SEC filings, those documents that you’re going to put [00:28:00] on your investor portal as well, that the investors can go on electronically sign and electronically move their money.
Your investors will wire funds into that investor portal, and then there’ll be a confirmation. But when you talk to an investor, they might not want to invest right away. So you’re going to want to build a funnel. You’re going to have some lead magnets out there. You’re going to provide that slide deck and webinar to potential investors.
You’re going to have that documentation that’s going to help you as your marketing arm for while you’re building relationships, meeting new investors, now sending them marketing. And all of these tools you put together, all of these lead magnets, lead generating tools you put together are going to help you do that.
Places to market for investors and you can market for investors even when you don’t have a deal. Best time to raise capital is in between deals actually. But you can market for investors even when you don’t have a deal on social media, by email, organically paid ads. There’s several ways that you can do that.
And as long as you’re not offering a deal, a 506B [00:29:00] to an investor that you’re marketing, build that relationship. Then when you bring a 506B to the market, now you can offer that to that potential investor. So, I hope that’s been helpful for you here along the way today. I always put my hot seat up.
Anybody has any questions or they need anything. Don’t hesitate to send me an email. Call me. I’ll be more than happy to answer questions for you. Here’s how you do get a hold of me. I’m going to suggest, you know, grab that QR code. And, download my microsite. My microsite gives you all access to all my social media, all my companies, our websites, email, and, some other goodies for you on there as well.
So, don’t hesitate to download that and take a look at that. There’s my phone number and that’s actually my private cell phone. 325 436 357. Email me if I can be of help to you. Thanks. I look forward to you being back next week. We’ll be back next week with another hot topic and guest and I will look forward to working with you and helping you build your multifamily portfolio and syndicate either your [00:30:00] first, fifth or 10th deal.
Kristen: Thank you, Mike, and thank you for joining us for another great episode of Insider Secrets. As always, Insider Secrets is brought to you by My Core Intentions. Wherever you hang out on social media, you will find Mike and My Core Intentions. Please like and follow us to get the most up to date real estate investing trends.
Visit mycoreintentions.com where you can get expert coaching on all things real estate investing and property management. If you’re looking to become an expert, Mike’s coaching will help you scale your real estate investment business. We’re looking forward to having you back again next week for more Insider Secrets.
