When you're raising capital for your first real estate deal, the numbers matter—but trust matters more. The easiest and most practical way to win over investors is to start with a clear, simple pro forma and a transparent plan for how you’ll protect their money.
The process begins by asking one question: What do I think this building is realistically going to make? A pro forma doesn't have to be complicated. Estimate net income, look at expected expenses, project rental growth, and run the numbers over a five-year period. That gives you the baseline.
Then comes the entrepreneurial part—assigning value to your own work. If the deal is going to generate $100,000 over five years, you might reasonably decide you want $50,000 of that for your effort, time, risk, and operational management. That leaves $50,000 on the table for investors.
So the real question becomes: Is that a good deal for them?
Reverse-engineer the numbers. Run a quick IRR calculation. If the investor walks away with an 8% annual return plus the tax advantages that come with real estate, that’s often a compelling offer—especially in a world where many people are looking for stable, asset-backed returns.
Once the math checks out, the next step is simple: call the people you trust. Present the opportunity clearly. Show them the pro forma, explain the upside, and be honest about the risks. Then ask the most important question that most investors never think to ask: “Here’s how I protect your money.”
Walking through your safeguards—your underwriting discipline, your contingency planning, your construction buffers, your capital reserves, your exit options—is what separates amateurs from professionals. If you believe wholeheartedly in the protections you’ve put in place, it becomes much easier for investors to believe in you.
Raising capital isn’t about hype. It’s about clarity,