Explained: How Can A New Investor Raise Money For Their First Deal? (Michael Blank)

In this episode, Robert talks to Michael Blank about raising capital for the first deal.

Robert Leonard:
So, let’s talk about the money portion of it. How can somebody get started with having no cash of their own?

Michael Blank:
This is a limiting belief that I had, as well, as I always thought that I need to rely on myself to do certain things for anything, really, but when I had to raise money for house flips, and some people agreed to lend me money, this light bulb went off. I was in disbelief. “Let me get this straight. I can buy houses without having any of my own money, and I make money in the process.” That was crazy for me. And so, really, a lot of this limiting belief came off, and with that, other limiting beliefs, as well. “First of all, I don’t know anyone with money.” Well, okay, that may be true right now, but there are people who know people, and you don’t know everybody in the world. If you go to a meetup or a real estate association meeting and look at the people in the room if you were to do a poll, and I’ve done this before, and say, “Hey, raise your hand if you’ve got at least $25,000 to invest in some kind of liquid asset or IRA,” and a whole bunch of hands go up. “You have that money? Okay. Keep your hand up if you have $50,000 or more.” Some hands go down. Some stay up. “$100,000 or more?” Some hands go down. If you add up all the money in the room, there are millions of dollars of money in the room of people who are already thinking of real estate in some way. Okay? You either have passive investors in the room or you have joint venture partners in a room. So, all of a sudden, you’ve met all these people who have money and have real estate on their minds. It’s just a matter of getting yourself out there. With that, basically, what you’re doing is you’re not so much raising money, but actually just sharing your enthusiasm with people. So you’re saying, “Hey, I’m so excited getting this apartment building, and my investors are getting a 10-15% return, and $50,000 minimum. I’m just really excited about it. Do you know anyone who might be interested in a quick phone call?” They might respond, “I might be interested” or “Oh, my brother’s interested. He’s got a rental house.” And so, you get a series of referrals to people by sharing your enthusiasm. Instead of talking about the weather, politics, or sports, you’re a little bit more intentional in your conversations. You say, “Hey, this is what’s new with me. I’m getting into real estate apartments. It’s really cool. Let me tell you about it…” And you just kind of take the conversation where it goes. That’s really the art of raising money, and getting people to believe in you.

Robert Leonard:
You also just never know who actually has money. That’s one of the biggest things that I’ve learned. I actually worked at a local bank here for three years when I was in college, and also now that I’m in real estate. I see people come into the bank. You’d think they have all the money in the world as they dress very nicely, drive a nice car, have all the nice watches and phones and things like that, but then they actually don’t, and vice versa. People that didn’t look like they had money would actually have a lot of money. The same goes for real estate. As soon as I started putting myself out there as a real estate investor, all of these friends and family members started reaching out to me.

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