caroline addis

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  • Raising Private Capital: Building Your Real Estate Empire Using Other People's Money

  • By: Matt Faircloth
  • Narrated by: Randy Streu
  • Length: 6 hrs and 27 mins
  • Unabridged
  • Overall
    4.5 out of 5 stars 134
  • Performance
    4.5 out of 5 stars 121
  • Story
    4.5 out of 5 stars 119

Are you ready to help other investors build their wealth while you build your real estate empire? The road map outlined in this book helps investors looking to inject more private capital into their business - the most effective strategy for growth! Author and real estate investor Matt Faircloth helps you learn how to develop long-term wealth from his valuable lessons and experiences in real estate: Get the truth behind the wins and losses from someone who has experienced it all. 

  • 4 out of 5 stars
  • No Fluff, just solid, experience-based advice!

  • By caroline addis on 09-21-18

No Fluff, just solid, experience-based advice!

4 out of 5 stars
5 out of 5 stars
4 out of 5 stars

Reviewed: 09-21-18

First, let me qualify my comments by saying that I am not an unbiased reviewer. I have known Matt for a few years through the South Jersey REIA. He and his wife, Liz, have always proven to be helpful in sharing real estate expertise. Matt brings a very positive and professional approach to relationships and his real estate business. I chose to listen to the audio version of Raising Private Capital so that I could take notes. By doing so, it helped reinforce the content. The book is well organized and the narration was quite good. As a former banker, I found the description of the sources of financing, structuring of deals and the pros and cons of different types of cash providers to be well defined. Matt’s experience with many property types (from single family houses to 198 unit apartment complex) gives him a foundation to share valuable insights and offer advice. He’s the real deal!

Matt toughed-out the down turn in 2008 and applied lessons learned to improve his investment business. I was surprised to learn how he was able to overcome a significant financial set-back that occurred when a 1031 Exchange Intermediary defrauded him of $700K on one of his most profitable deals. His sharing of knowledge is not done in a boastful way, but he humbly explains how his philosophy on life has shaped his approach to business. Matt emphasizes that real estate investment is a marathon, not a sprint.. He advises the reader to lay the groundwork with solid education, taking “personal inventory,” developing a track record and creating a one page business plan (with lots of contingencies). Matt stresses the importance of systems, building relationships, giving back to help others and, most importantly, “be respectful of investors’ money.” Matt will go to all lengths to make investors “whole” even if it requires him to reach into his own pocket to cover the deficiency.

He illustrates the various types of investment vehicles and provides “case studies” for explanation. Matt’s keys to success include three important elements: always under promise / over deliver; keep regular communication channels active with cash providers; and show passion. He advises the deal maker that his success has resulted from “falling in love with this business.”

Chapter 5 covers Where to Find Cash Providers. Matt outlines a “Cash Provider Pyramid” with three tiers. First, focus on the “core group” of friends and family, sharing successes with them and social media. Begin making your “master list” by educating that group on uses of retirement accounts and other assets to invest in real estate. Tier 2 is comprised of referrals from professionals in the industry, educational events and social circles. Tier 3 entails taking deals to the public. Matt outlines 7 paths to access people who may not currently be aware of the “opportunities” that you could provide to them. He reminds the deal provider that “we are not asking for money,” but providing a service for those “who are looking to put money to work.” The reader should carefully review the 7 paths enumerated in Chapter 5.

Chapter 6 offers advice on Turning Potential into Reality. Here is where the “rubber meets the road.” This chapter is where Matt outlines the process and steps to implement a systematic approach to raising capital. He admonishes the deal provider to always be focused on the cash provider point of view - WIIFM (what’s in it for me) – and the importance on follow-up.

Chapter 7 discusses How to Structure the Private Loan. He addresses the questions to ask the lender, the process and documentation in securing financing as well as the potential pitfalls in structuring a loan. Matt advises the deal provider to carefully monitor all activity on the two most important transaction dates – Day of Purchase (Closing) and Day of Sale or Refinance.

Chapter 8 covers How to Structure Private Equity Deals, which involve passive investors. Matt outlines when to use different finance strategies. For example, the BRRR (Buy, Rehab, Rent and Refinance) strategy is typically used with deals having less than 10 units. These smaller deals, typically, have lower risk of downside and are often funded with equity. Larger deals will require some combination of debt and equity. These agreements can become quite complex and may involve several traunches. Some capital structures may have preferential treatment, such as in lien status or a sharing of profits after return of capital. Turnkey deals are described, where a property is fully rehabbed, pre-leased and offered as an investment to an equity cash provider. Joint Venture (JV deals) are covered with the appropriate financial structures. In JV deals you may not be providing the cash provider with a percent of ownership, but pledging a percent of net proceeds. This chapter also covers syndication and setting up an equity agreement. In essence, there are a myriad of ways to structure deals depending on the cash providers’ risk preferences and investment horizon. Also covered are the additional ways for deal providers to generate additional income – incentives and fees that may be performance based.

The final chapter, Chapter 9, Management, Exiting and Beyond addresses ways to manage the cash providers as well as strategies to exit deals. The loan or equity agreements need to clearly spell out the expenses under the deal (e.g., management fees and incentives) as well as how the net proceeds are calculated to determine a “profit split” with partners. Agreements should also clearly state how equity participants should be treated in the event of a desire to exit early from a deal. Tax implications need to be delineated so as to avoid negative repercussions for cash providers. Matt encourages deal providers to “think beyond the deal” to focus on who you want to serve and how to develop and foster those relationships. His last admonition is to always remember three guideposts: first, “they need you,” second, it is critical for deal providers “to treat cash providers’ money like a fiduciary” and three, “to play the long game.”

Well done Matt! Thanks for your knowledge, inspiration and friendship. Keep up the great work!

5 of 5 people found this review helpful