At key milestones, I like to share my progress with aspiring real estate entrepreneurs. Motivating others on what’s possible is important, as I know I have been motivated by others sharing their story. There are many different paths in commercial real estate investing and getting into syndication.
No Turning Back
Not too long ago, in the spring of 2016, I started my syndication business. I partnered with experts and joined a syndication team that was focused on investing in multifamily apartments. I also joined a training program to learn more about how to buy my first apartment. After being in the program for about 3 months, it dawned on me that this was a more complex, time demanding and risky route for beginners – especially those with little background or credibility in the commercial real estate space. How would lenders or investors react to my first deal? How can I find that first deal in a highly competitive landscape with larger companies with teams of analysts?
I decided after 3 months of training, that going out on my own was not smart. It was better to join experts, learn from them, and offer whatever value I could without expecting compensation. I had 20 years of management experiences in the corporate high-tech world. When I decided to leave my job, I had about 12-18 months to pursue something with all my energy. I knew once I left, I was never going back. I had to find something, and I felt it was going to be investment and real estate related.
My mentor took me up on the idea. I participated in a variety of roles including property tours, due diligence on comps, validation of key underwriting assumptions and investor relations activities. I enjoyed that latter part the best and learned that my most valued role for the operator is educating investors on opportunities that we had and bringing in capital from them to fund our deals.
My First Capital Raise
I started out fast on my first deal raising one million dollars with 13 investors. I did a podcast interview on that experience, got a transcript of it. Afterward, my mentor said, you now have about 80% of your first book. So, I did just that. I turned my interview and 10 tips to raising capital into my first book, How I Raised One Million Dollars in Two Weeks.
I did not know it at the time that raising one million dollars is quite a feat. Nor did I think if you asked me, that I would be any good at it. I was doing what many would consider a marketing and sales role. I failed at my first job out of college selling whole life and disability policies during a recession. It wasn’t my passion and I had such a bad experience. So much so that I put on blinders for the next 20 years – shying away from anything that might be a career along those lines.
I did like talking to people (having bartended my way through college), and I did love investing in general. This ultimately overshadowed any reservations. I just had an innate passion for investing in real estate and realized few people had been exposed it.
Growing The Business
After my first deal, I never looked back. I snowballed that experience into more deals with the same operator – now totaling 20 large apartment communities and well over 6,000 units – never raising less than one million for any deal. My biggest raise was $4,000,000 in 48 hours when the stars lined up just right. I’m an integral part of the sponsorship team and continue to work in a variety of support roles.
Over time, I recognized that as my investor network was growing, they wanted to do more deals and diversify their holdings – not just MF apartments, but also self-storage and mobile home parks. My mantra with investors was along the lines of investing is best done to reduce risk by diversifying three ways: by niche, by geography, and by operator. This led to my second book more for investors called Riches in Niches. And to make this a reality for our investors, I established co-sponsor relationships with a few more operators.
I expanded my vetting process to include third party underwriting checks and added more customer experience tools such as an investor portal, a place our investors can go to see their investments with us. I’ve continued to educate investors and have written and created over 50 blogs, several special reports, videos, and books. I speak at conferences across the U.S. as I share two stories. The first being the investor story, about how investing in niches can really get you ahead of the game. The second, talking with other aspiring entrepreneurs about how I got into the syndication business. I have also developed an active coaching program around these.
Why We Do It
Our investor portal now includes over 30 syndication deals across these 3 niches and recently surpassed over $100,000,000 in investor capital. Again, this all started a short 3 ½ years ago by simply surrounding myself with experts, joining them, and finding a way I could contribute and learn – and now, sharing my experiences with others.
I do work harder than I ever have in my life, but I spend most of that time “in flow”. I love what I do, and it’s not work. The extra time and energy that comes from true passion and seeing a business thrive and grow keeps me going. My investor relationships and seeing the investments pay off and taking care of current demands – like college tuition, incredible family trips to more touching stories of people able to go part-time or quit their job to pursue their own dreams – is very real and motivating to me.
Commercial real estate is a great place to be and can be an incredible business. You don’t have to be in a hurry, I just found the right people at the right time. I was getting burned out after 20 years in the corporate high tech world, was extremely interested and passionate about real estate investing and recognized where my strengths were. I gained experience working in syndication, learned about what makes good markets and good deals, then educated investors about our opportunities.
“I do work harder than I ever have in my life, but I spend most of that time ‘in flow.'”
Great article, Dave! I saw this through your LinkedIn post.
Flow is a completely brilliant concept that I don’t hear a lot of people talking about in this space. I’d be interested to read a blog specifically on what “Flow” means, and looks like, to you in this space.
Congrats on the milestone Dave! Much more to come!
Excellent results to date with Thompson Investing. I will soon be investing with David in
a 7th venture. Highest praise for his selection of the general partners, communication and execution
of business plans.
Thank you so much for sharing your experience starting out after you left 20 years in the corporate world.
I just decided to check your website after reading a post on a real estate investing site about your informative blog.
Your post was great for me as, similar to your story, I’ve been in the corporate world for 20+ years and have always had the desire to pursue real estate – specifically, MF and self-storage investing – but have never gotten beyond buying a couple “guru’s” courses.
Your post has inspired me to direct my focus from trying to learn and do everything on my own – to finding an experienced, credible Operator and figuring out how to add value to his/her company’s investment process and mission without any expectation of compensation.
Thank you again.