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Private capital can be a game-changer for real estate investors. In this post, we dive deep into the ins and outs of raising private capital, guided by Troy Fullwood, a seasoned expert with over 23 years in the note business. From understanding lien positions to crafting a compelling business plan, we’ve got you covered. Let’s walk through the process step by step to help you fund your next big deal.
Troy Fullwood is a name that commands respect in the world of real estate notes. With 23 years of experience and over 15,000 note transactions under his belt, he knows the industry inside out. Troy’s niche is real estate notes—both first lien performing and non-performing residential notes, spread across the nation. He stepped into this field because he found traditional fix-and-flip models limiting. Rather than hunting for nuts and bolts at Home Depot, he aimed to emulate the more sophisticated financial plays of banks, and the rest, as they say, is history.
A lien position is a crucial term in real estate and note investing. It defines your place in line when it comes to claiming rights to a property. The first lien position, often called the “golden position,” is the most coveted because it has the highest priority over other claims.
For example, if you hold the first lien on a property, your claim will be satisfied before any second or third liens if the property is sold. This makes the first lien position a safer and more attractive investment.
Private capital refers to funds held by individuals in accounts they control, such as 401ks, savings accounts, or money market accounts. Unlike institutional capital, which comes from entities like banks or hedge funds, private capital has its limitations.
Raising private capital typically follows a straightforward process, especially for smaller deals like fix-and-flips. Here’s how it often goes:
For scaling up to larger deals, having a structured business plan becomes essential.
A solid business plan is your blueprint for success. Here’s what you need:
Include supporting documentation like industry reports or case studies to lend credibility to your plan. You can even use tools like Fiverr to create professional-looking documents tailored to your needs.
Once your business plan is ready, you’ll need to condense it into an executive summary or pitch deck. This should be no longer than two or three pages. Here’s what to include:
A well-crafted executive summary respects investors’ time and gets straight to the point, increasing your chances of securing a meeting.
Finding the right investors is half the battle. Use family office databases, like FamilyOffice.com, to search for potential partners. Here’s how to do it:
Now that you’ve identified potential investors, it’s time to reach out. Here’s how to do it effectively:
Building relationships is crucial for long-term success. Here’s how you can make a lasting impression:
Once an investor shows interest, they might agree to a short call. Here’s how to make it count:
If the call goes well, you’re moving into more serious territory. Here’s what happens next:
Each source of capital has its benefits and drawbacks:
Troy is currently raising capital for a $100 million firm focused on real estate technology for realtors. His process involves:
Here are Troy’s final tips for anyone looking to raise capital:
Raising private capital might seem daunting, but with a structured approach and the right mindset, you can unlock opportunities you never thought possible. Take these tips to heart, and you’ll be well on your way to securing the funds you need for your next big real estate venture.
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