Latest / The Academy Presents podcast / Building the Network: How Capital Raising Fuels Real Estate Growth with Ruben Greth

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Building the Network: How Capital Raising Fuels Real Estate Growth with Ruben Greth · The Academy Presents podcast

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joining us here today hey guys i just want to
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thank you again for being here today you know
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i've said it multiple times but these are absolutely
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my six favorite days of the year because i get
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to talk to amazing people and i get to share
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with all of you all of the stuff they know and
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it is insane so you know a lot of us today have
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all these questions about how the heck do we
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raise capital and so We've got Ruben Greth here
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and he is like the man when it comes to capital
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raising. He's got a whole podcast about it. So
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he gets to hear from amazing people in that space,
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but that's what they do. And he's going to share
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it with us. So Ruben, I'm going to let you kind
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of talk a little bit about your background maybe,
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and then we can get going because this is going
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to be awesome. How fun. Really excited to be
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at this conference first time here. So this is
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going to be a blast. Definitely have a lot of
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different topics and sub -nuanced niche specific
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things about capital raising that we'll dive
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into. And I can't wait for that. But I'll break
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down a little bit of my background relatively
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quickly. I got my start in about 08, 09. I started
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raising for single families. Didn't go too far
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there before. I came across a mentor teaching
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large scale multifamily, not necessarily syndication,
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but like dividing conquer strategies and taking
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down 60 unit complexes. And I was like in the
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four unit, you know, I was like, oh, four units
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is so big. And now you guys are talking about
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like taking down 60 unit projects. It was so
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like outside of the norm for me. But what happened
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was there was this guy. So everybody remembers
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the economic meltdown and crisis of 2008. And
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a lot of people lost their butts, you know, on
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a lot of different particular single family guys.
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And I had this partner that came in from San
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Diego with a bankruptcy. He had lost all his
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money in spec home developments. And then he
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just started buying all these fourplexes and
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like me coming from a background at like Wells
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Fargo and finance. I was like, how are you? purchasing
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all these properties. Don't you have a bankruptcy?
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And he's all, we're just raising capital for
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them. It's a great time. Everything's rock bottom
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here in Phoenix. And I was like, really? So you're
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taking down a fourplex like every couple of weeks.
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Is it cool if I just follow you around with my
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camera and shoot some videos of how you are taking
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these things down? So I followed him around and
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sure enough, we created some really good content.
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I threw it on a YouTube channel and within about
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nine to 12 months. people were so interested
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in the market and how cheap everything was. Cause
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we were buying like four plexes for like $72
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,000. Like it was crazy. It was so inexpensive,
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relatively speaking. So we raised about 650 ,000
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or I should say, that's the portion that I brought
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to his team. And at some point. He was very focused
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on micromanaging his contractors. And he's like,
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Ruben, why don't you, you know, instead of focusing
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on acquisitions, just go raise more and more
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capital and do marketing stuff. So I kind of
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went a little bit overboard and hired this like.
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production company from san diego we're going
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to create this like mini pilot and do like a
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cd series and go on tour and all these things
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i had all this like master plan for creating
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a marketing system around you know taking down
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these fourplexes and he started not showing up
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because he was so busy dealing with the nuances
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and little parts of micromanaging the contractor
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so we started fighting And we ended up splitting
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up and I sold all my little four plexes and 12
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plexes. And, and I didn't know what to do at
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that point. So I like crawled back to corporate
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America with my tail between my legs because
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I knew marketing, but I didn't know how to acquire
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stuff. or find a new partner i didn't think i
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had this limiting belief back then that multi
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-family partners don't grow on trees which i
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definitely have broken that mindset now because
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they typically do grow on trees i interview them
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all day long every day on the capital razor show
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podcast so i knew that i wanted to get back into
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real estate and didn't know exactly how to do
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it. And I thought, you know, I'll just buy a
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fourplex and then double my portfolio and double
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that and then double that. And I'll multiply
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that portfolio five times. I'll end up with 32
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fourplexes and I'll be done. And I presented
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this plan to somebody at the local Arizona real
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estate investor association. And they're like,
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Hmm, 128 units, all consisting of little fourplexes.
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Why don't you just buy 128 unit building? You'll
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be done. And I was like, what? Like, I don't
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know how to do that. So they introduced me to
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this thing called. multifamily syndication i
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got really interested started interviewing all
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these gurus that's going to pay someone like
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30 grand to teach me the business and in the
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process all all of the four plexes that i had
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previously bought from my broker he i knew that
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he like sold some people syndicated properties.
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I'm like, who do you know in Phoenix that syndicates?
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He's like, oh, I know Bakerson. I sold them a
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$5 million property last year. So I'm like, can
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you set up an interview? I'd like to ask them,
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like, how do I do this syndication thing? Like,
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who do I need on my team? And sure enough, he
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set me up with an appointment. I went to Bakerson
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and was like, hey, you know, like, how do I put
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together this whole syndication thing? I've seen
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you guys around town before. And they're like,
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well, what do you care for? And I was like, well,
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I used to raise capital for small multis. And,
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you know, I see multifamily is a great avenue
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for wealth creation. I want to build a team and
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do this. And they're like, wait a second. Did
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you say you raised capital? I'm like, yeah, I
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raised like $600 ,000. And they're like, we need
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somebody like you. We need more capital. Come
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join us. Hung out with them for a while. We were
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doing heavy lift syndications in Tucson. And
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that was fun. It was very challenging at first
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because they're just like, hey, we brought you
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on to bring the capital. Where's the capital?
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Where's the capital? And I'm just like, well,
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I haven't built a network yet. I don't even know
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who to raise it from. But eventually I started
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this show called the Capital Razor Show and was
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specifically interested in the beginning on.
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how to raise capital from limited partners. Over
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time, I found out that there's a whole bunch
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of other ways to raise capital, including co
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-GPs and creating funds. And you can do creative
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finance and a variety of things. And throughout
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building this show, the Capital Razor Show, I
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was interviewing these sponsors and interviewing
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these syndicators. And I had this light bulb
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moment. I was like. I wonder if I can put these
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syndicators on one side of the country with these
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capital raisers on the other side of the country
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and make money doing this. So I interviewed a
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couple attorneys and asked them, how do I do
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this and stay legally compliant so that I don't
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go to jail for raising money incorrectly? And
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they're like, in order to do that, my friend,
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you need to start your own fund. So then like
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I got crazy about funds and I eventually left
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Bakerson to go launch my own fund when. a friend
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of mine named Andy approached me. He's like,
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hey man, instead of starting your own fund and
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like having this kind of really hard time with
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everything, including paying for the documents
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and then having to answer the question, well,
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how many of these funds have you done to my potential
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investors? Why don't you just come join me? I've
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done a few funds. I need some help with automations,
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exposure, branding, rebranding. And I want to,
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you know. build some momentum here. Why don't
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you just come join forces with me? And I said,
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let's do it. So that was the inception of me
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becoming a full -blown GP owner, operator, owner
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of a GP company, Legacy Acquisitions. And so
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we've been doing build to rent half the time,
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but half of our business model is raising capital
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for other sponsors. And the other half is we're
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actual GPs that build subdivisions in Louisiana
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and Alabama. So this has been a crazy journey.
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And it's just unimaginable that you can end up
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being and growing as fast as you can in this
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space because you surround yourself with a bunch
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of minds, you know, abundance mindset of people
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and things can grow very quickly. Hey guys, it's
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Angel. In case you didn't know, I put on a three
9:13
day virtual summit twice a year. It's the Real
9:16
Estate Investing Rocks Summit, and I've been
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hosting it since March of 2020. The next one,
9:21
number 11, is March 25th, 26th, and 27th. Three
9:25
full days, no cost to you. My friend Sandy is
9:29
speaking, and she's supported me at every single
9:31
summit since I started. Joe Fairless, Kathy Fedke,
9:35
a Tony Award winner, another friend who's raised
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literal millions from people met on LinkedIn,
9:40
and the list goes on. You have to join our Mighty
9:44
Networks community to gain access. And that link,
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it's in the show notes. Yeah, no, I, you know,
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I've had this conversation with a couple of different
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people in the past few days. And when you hear
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guru, you always think, oh, because it's people
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have really connected that to like a negative
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thing now. But honestly, I want to be a guru
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someday. I want to be that person that has landed
10:13
success and that people want to be around and
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learn from. And I want that to be the thing I
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chase. I don't think there's anything wrong with
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that. And I just, I don't know. I want to be
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there and I want to be able to get that growth
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because like you said, it can happen. And it
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can happen quick. It can happen really quickly.
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At least getting the momentum and doing a couple
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few deals and hanging out. You stumble on a couple
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of people that want to do business with you.
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And if you have the right alignment of interest,
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it can grow very quickly. Yeah, absolutely. Yeah,
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I know. And it's, you know, I know Andy too.
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And it's really cool to see who has connected
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with who over the last four. I guess four years,
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four or five years. We've gotten to the multifamily
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space probably around 2017, 2018. And so it's
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been really neat to see just the web of connection,
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right? And how people have decided where to land.
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You know, my husband and I, we just got through
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Raisin for a deal. And I think it's probably
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the hardest thing out there. It's some people
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consider it a completely different business than.
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you know, the acquisition of property versus
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the acquisition and acquiring of capital for
11:28
the purchase of property. Some people consider
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them completely different businesses. Yeah. I
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just don't even like when you said to, was it
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Bakerson? Bakerson was my old team. Yeah. Great
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guys. So when you like told them, I don't have
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a network yet. How do you, how do you start that?
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How do you get that going? How do you create
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that network of people that you can actually.
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talk to and reach out to and be like hey so you
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want to invest in this deal yeah so it's a lot
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of communication and branding over long consistent
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periods of time so then that brings the question
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you know if i'm going to do a capital raise today
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and i don't have that well what do i do so i
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found out quickly that one of the kind of hacks
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that you can tap into is this thing called co
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-gp structures where you bring somebody that's
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already done the work that you want to do over
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time make them part owner of your company yes
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you have to give up a portion of your company
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but if you can handle the money to acquire these
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properties that you have it can be done relatively
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quickly like in a few months instead of a few
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years so co -gp was a big momentum hack for me
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in the beginning days with bakerson i brought
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in some co gp capital to take down a 90 unit
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and then i started raising for a hotel play it
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was you know we're going to take a hotel and
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convert it into an apartment complex raise some
12:53
money for that in the middle of me raising money
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for it i was like i need to go off and spread
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my wings and i left and I relinquished my GP
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share of that capital raise, even though I had
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raised like $450 ,000 so that I could go do my
13:07
own thing and not be attached to anything because
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you can't just raise capital and then walk away.
13:12
You have to have some kind of ongoing participation
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over the entire duration of a project to stay
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legally compliant with the SEC. It's not this
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kind of commission -based structure where you
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just raise money and then disappear. you need
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a license in order to do it that way which is
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also something that i found out about and kind
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of explored like whether or not it makes sense
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to have some kind of series six or seven licensed
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in order to raise capital for other teams but
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you know back to your question how do you develop
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that network so that when you do have a deal
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you can raise for it And a lot of it comes from
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branding, from automations, from consistent communication,
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from having a platform. Whether you have some
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kind of a website or a newsletter or a podcast
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or a book, those are all great platforms for
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sharing. your message and using it to create
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authority. Meetups are great. Going on other
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people's podcast is great. And if you do this
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for long enough, people start hearing about you
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and you start to develop a reputation as somebody
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that they may be interested in working with,
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at which point you just start to have a lot of
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conversations. And hopefully if you're not trying
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to sell anything, you can make enough friends
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so that eventually when you do have a deal. you
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feel pretty confident that you can at least raise
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the portion of the capital in conjunction with
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other potential team members and co -GPs and
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other sources of equity and capital. Wow. So
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like, that's a lot. It is a lot. That's a lot
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to digest. And that's just like the tip of the
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iceberg too, right? So like some of the topics
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that I wrote down here about things that we could
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talk about, like these are all topics that I've
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talked about on the show. mindset, branding,
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keeping investors warm between deals, fund structures
15:07
and raising capital in a fund, avatar creation,
15:11
which is incredibly important, right? So like
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one of the things that you want to do in the
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beginning is like send a message to a specific
15:17
avatar because one of the major mistakes a lot
15:21
of people do is they want to get doctors and
15:23
lawyers and business owners and, you know. NFL
15:28
athletes and they're trying to get money from
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wherever and then their marketing and their messaging
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doesn't resonate with anybody because it's too
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broad. It has to be kind of niche specific. So
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creating a platform is another topic, emotional
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versus logic -based selling, story brand selling,
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taking people through the story brand, creating
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traffic, marketing automations, creating newsletters,
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all of that stuff. are little nuanced topics
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that the successful capital raiser a lot of time
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is exploring and you know all of those and if
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they can get good at at least some of them they
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have a leg up on some of the people that haven't
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been able to spend a lot of time focusing on
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the capital raising side because they're so busy
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doing acquisitions and other things that also
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require a great deal of bandwidth, right? So
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how do you do it all? You partner with people
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that can help you. That's the hack.