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Writer's pictureDeRosa Success Team

Raising Private Capital for Real Estate: A Key Strategy for Scaling Your Investment Portfolio

If you’re looking to scale your real estate business, mastering the art of raising private capital for real estate is a crucial skill. By leveraging other people’s money (OPM), you can fund larger deals, increase your cash flow, and build wealth much faster than relying solely on personal funds or traditional financing.


In this article, we’ll explore the fundamentals of raising private capital for real estate, the strategies you need to be successful, and how the DeRosa Group’s educational programs can help you achieve your goals faster and more effectively.

raising private capital for real estate
Make a Change by Raising Private Capital for Real Estate

What is Raising Private Capital for Real Estate?

Raising private capital for real estate involves securing funds from individual investors who are interested in the returns generated by real estate investments.


Unlike bank loans, private capital often comes with more flexible terms and allows investors to pursue larger, more lucrative opportunities.


Private capital can come from various sources, such as:


  • Friends and family

  • High-net-worth individuals

  • Self-directed IRAs or 401(k)s

  • Angel investors or real estate syndications


This capital can be used to acquire multifamily properties, commercial buildings, or even fund new developments. By raising private capital for real estate, you have the potential to dramatically expand your portfolio while sharing the profits with your investors.



Why Raising Private Capital for Real Estate is Essential for Growth

Relying solely on personal savings or traditional financing often limits how quickly you can scale your portfolio.


Raising private capital for real estate offers several key advantages that can accelerate your growth:


1. Scale Your Portfolio Faster

When you have access to private capital, you can pursue larger deals, such as multifamily complexes or mixed-use developments. These deals often provide better returns, more cash flow, and greater appreciation potential, allowing you to scale your portfolio exponentially.


2. Improve Cash Flow and ROI

Because private investors typically seek attractive returns, the deals you fund with private capital often involve higher cash flow properties or value-add opportunities. As a result, raising private capital for real estate can lead to improved cash-on-cash returns and overall return on investment (ROI).


3. More Flexibility

Private capital comes with fewer restrictions than traditional bank loans. Investors may be more willing to structure deals creatively, allowing you to align terms that benefit both parties. This flexibility can include interest-only payments, profit-sharing, or deferred payouts, making raising private capital for real estate a highly adaptable strategy.


4. Access to Off-Market Deals

By leveraging private capital, you can act quickly on off-market or distressed properties, which are often highly competitive. With funding readily available, you can close deals faster, negotiate better terms, and acquire high-value properties before other investors have a chance to bid.



How to Start Raising Private Capital for Real Estate

If you’re new to raising private capital for real estate, the process may seem intimidating. However, with the right strategies and guidance, it’s a skill you can master and leverage to scale your business.


Here are the essential steps to get started:


1. Build Your Credibility

Before you start approaching potential investors, it’s crucial to establish your credibility. Investors want to know that their capital is in good hands, so focus on building a solid reputation by:


  • Sharing your past successes and track record in real estate.

  • Creating a professional website, social media presence, and marketing materials that showcase your expertise.

  • Networking with other investors, real estate professionals, and potential partners to build relationships and gain trust.


2. Create a Winning Pitch

To succeed at raising private capital for real estate, you need to develop a compelling pitch that clearly communicates the value of your deals and the potential returns for investors. Your pitch should include:


  • An overview of the deal: Location, property type, and acquisition strategy.

  • Projected financials: Cash flow, IRR, and ROI to demonstrate the investment’s potential.

  • Exit strategy: How you plan to return the capital to investors, whether through refinancing, selling, or ongoing cash flow distributions.


The more detailed and transparent your pitch, the more confidence investors will have in your ability to deliver strong returns.


3. Build a Network of Investors

Finding the right investors is a crucial part of raising private capital for real estate. Start by tapping into your existing network—friends, family, colleagues, and acquaintances who may be interested in real estate investing. You can also attend real estate meetups, conferences, and events to connect with potential investors.


Consider creating a mailing list to keep investors informed about new opportunities, deal updates, and your overall progress. Consistent communication is key to building trust and maintaining strong relationships with your investor network.


4. Utilize Syndication Structures

One of the most popular methods of raising private capital for real estate is syndication, where you pool funds from multiple investors to acquire a larger property. In a syndication, investors receive a share of the property’s profits, often in the form of distributions and appreciation.


By syndicating deals, you can raise significant capital, diversify your investor base, and take on larger, more lucrative projects.


5. Offer Attractive Returns and Incentives

To attract private investors, you need to offer competitive returns that align with the level of risk.


This can include:

  • Preferred returns: Offering investors a set return before you, as the sponsor, receive any profits.

  • Equity participation: Giving investors a share of the property’s equity in addition to their initial investment.

  • Regular distributions: Providing monthly, quarterly, or annual payouts to keep investors engaged and satisfied.



How DeRosa Group’s Educational Programs Can Help You Raise Private Capital for Real Estate

If you’re serious about raising private capital for real estate, learning from experts like the DeRosa Group can make a significant difference.


The DeRosa Group’s Accelerator and Accelerator+ programs offer in-depth training on how to secure private capital and fund larger deals.


What You’ll Learn:

  • How to identify and approach potential investors: Learn where to find investors and how to present your deals effectively.

  • Structuring successful deals: Understand how to structure deals that are both attractive to investors and profitable for you.

  • Legal and compliance considerations: Get insights on how to navigate SEC regulations, set up syndications, and maintain compliance.

  • Building a sustainable investor base: Discover strategies for maintaining strong relationships with investors, ensuring repeat business and long-term success.


The DeRosa Group’s programs are designed to accelerate your growth, offering not just theoretical knowledge, but real-world strategies that have been tested by experienced investors like Matt Faircloth, co-owner of DeRosa Group and author of Raising Private Capital.



Final Thoughts on Raising Private Capital for Real Estate

Raising private capital for real estate is one of the most powerful ways to scale your investment portfolio quickly and efficiently. By understanding the key strategies, building a network of investors, and creating compelling pitches, you can leverage private funds to acquire larger properties, generate higher returns, and grow your wealth faster.


If you’re ready to take your real estate business to the next level, consider joining the DeRosa Group’s educational programs. With their guidance, you can learn the ins and outs of raising private capital for real estate and build a successful, scalable investment business.


Ready to learn more? Reach out to the DeRosa Group today and start your journey toward mastering private capital and achieving your real estate investment goals!

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