Capital Raising: The Ultimate Real Estate Superpower w/ Hunter Thompson

203: In this episode, I sit down with Hunter Thompson, a capital-raising expert who has raised over $100M in private equity. As the founder of RaisingCapital.com and the creator of RaiseFest, Hunter shares his proven strategies for attracting top-tier investors, leveraging systems, and scaling in the real estate world.

(Show Notes: REtipster.com/203)

We cover:

• Why capital raising is the ultimate superpower in real estate.
• The difference between 506B and 506C offerings.
• The art of using LinkedIn to find high-net-worth investors.
• How to manage stress and investor expectations when stakes are high.
• The risks and rewards of fund-of-funds investing.

If you’ve ever wondered how to succeed at raising capital or wanted actionable tips for scaling your business, this episode is for you.

Transcript

0:53

If you solve the problems that rich people have, you will likely be able to get rich. If you solve the problems of poor people, it's very difficult to get rich. Not that you shouldn't do it, but that is a place for things like charity and philanthropic stuff. And that's my personal perspective on that. Hey folks, how's it going? This is Seth Williams. You're listening to the REtipster podcast. This is episode 203. Show notes for today can be found at retipster.com forward slash 203. Today, I'm talking with Hunter Thompson. So, Hunter is a capital raising expert who has raised over $100 million in private equity and has revolutionized the way a lot of investors think about generating capital in real estate. Hunter is the founder of RaisingCapital.com and the creator of RaiseFest, a three-day event designed to help you raise more capital. And Hunter is a master of systems and automation and leveraging technology to attract top-tier investors. And today, we're diving into the art and science of capital raising, unpacking his strategies and learning how he has positioned himself as one of the top minds in this field. So Hunter, welcome to the show. How are you doing? Doing well. Honored to be on. I was excited to jump on today and I'm excited for the conversation. Yeah, me too. So why don't we just start with your origin story? How did you get into real estate investing? When and how did you discover this business? Tell me a little bit about that. I mean, I've been doing a lot of thinking about this just recently because I used to come on here and I'd come on these interviews. I've probably done a thousand interviews in my life or something like that. And I would say, I was always an entrepreneur and I would tell stories about when I was kind of hustling. I was like five and six and seven. But the reality is like looking back on it, it took me a long time to realize this. I had to accomplish some pretty incredible things to recognize that I had a lot of limiting beliefs growing up Because I didn't do well in school. I thought that I was a slacker. I thought that I wasn't talented I thought that if you have a measuring stick and school is the measuring stick and you don't do well It creates a lot of problems. It creates problems with your psyche It creates problems with your parents and your relationship and my story is one of. Using the school as a metric, you would assume I wasn't going to make very much money. I certainly wasn't an accomplished thing incredible, but there were other metrics in my life that were far more applicable to things like making money and doing good at business. I took running very seriously and cross country and track. I was also in a band when I was in high school, but those are the things that are much more like business. In school, you're in these 30 to 50 minute classes where you're learning one thing and then you're switching gears and in the world of business and making money, it's all about focus and intentionality. And if you can spend 16 hours learning one thing that will actually make you far more valuable in the marketplace than being mediocre at chemistry for goodness sake. So my origin story is, you know, dealing with a lot of, I don't want to say trauma because it wasn't that pronounced. It's more like I recognize that that in my mind, I always had this ceiling on how much money I could make, and going through college, just being kind of like a slacker. But after I got out of college, the Great Recession took place, real estate prices collapsed, and I realized everybody that had a lot of money that I knew was always talking about going right when people were looking left. And it seemed to be just one of those moments, like one of those once a generation type of moments. And so I moved to California just because I felt like the vibe of the money that people were making, especially back then before people would say, oh, you're moving to California. What are you, a communist? It was very different back then. And I moved to California in 2010 and met the right people at the right time. And the people that survived that crash, especially in California, ended up being some extremely talented, well-versed real estate investors that I basically formed the foundation of my career around. So that's my story. Yeah. No, that's fascinating. When did you graduate from college? What year was that? So that was 2010. Yeah, I know. That's kind of what I was getting into the real estate world as well. It was in 2009 kind of thing. And just having your first look at real estate be just the bloodbath that was those few years there. Interesting time. And kind of... I don't know if it's good or bad that that was our foray into real estate because that wasn't normal. And I think it's been, for me anyway, it's been hard to have that be the standard through which I was introduced to real estate. Like a house should cost this much money and its prices just get higher and higher and higher and higher. It's like, am I ever spending or is that just the way things are now? Yeah, it's difficult. And you got to, you got to intelligently participate or you'll be left behind because as an entrepreneur, I mean, think about it. I mean, from my personal perspective, I started looking at deals in 2010. By 2014, I was seeing deals that were better than the deals I was seeing in 2020. Now, part of that's because the liquidity started to come back a little bit, deal flow started to increase. But the real reason for that was that I was able to network and grow my confidence and education faster than the market recovered, even when it was the most significant market run up in the history of commercial real estate. And so if you just sit on the sidelines, like truly, I don't mean not do deals. I mean, truly sit on your hands and do nothing. I will run circles around you regardless of market conditions. And I'll give you a perfect example of this. Over the last 13 months, my partner and I made a commitment, my business partner and I made a commitment in 2022 to stop doing what we were doing across any other asset class, which we'll talk about my whole background and go all in on Phoenix. We didn't do a deal for 13 months. Now that's like not putting any points on the scoreboard, but trust me, I learned a lot in that 13 months. We develop relationships, brokers, debt brokers, rehabbers, property managers, like during that entire time. And so you can constantly be doing that stuff regardless of market conditions so that when market conditions change, you can have a big truck to back up. And it sounds like you and I got started in the same time, which means that all your mentors were probably telling you hey it's 2009 back the truck up and you're like yo bro. I don't really got a truck. I got a bike. It's like, okay, well, you got to start putting in work to make that truck something that can actually hold something. And that's what I did at the beginning of my career. And I'm sure you did the same. Yeah, for sure. So I've heard you say that capital raising is like the ultimate, superpower in real estate. For those just starting, why do you think this skill is so transformative and advantageous compared to others like deal sourcing or creative financing? So just going back to my story, because I think it tells a perfect picture of this, because I was getting started around that time. And I met those mentors, like I mentioned, and I found that a lot of the people that were having a lot of success were syndicating deals. They were pulling investors together to buy bigger deals, to buy more deals, to buy more quality assets. And yes, there were fix and flippers that were making good money, but it just didn't speak to me. I wanted to be dealing with people that were making or losing millions, right? They either stood to gain or lose millions of dollars because that attracted people that I felt like I could rely on them to execute a business plan day in and day out. And so when I got into this world of learning about passive investments and such, I understood that you can pool investors together rather than have one investor invest $100,000. You could have 10 invest $100,000. Now you have a million dollars for a down payment, or you could create a fund and buy multiple different assets. Now, when I started to understand this, I was like, okay, there's these people that are really good at what they do. We call them in the industry, owner operators or sponsors. And they're the ones not just managing the property, but overseeing the manager. They're the ones signing on the loan. They're the ones executing the business plan. And I was kind of intimidated by them. I didn't want to try to compete against them. I wanted to partner with them so that I could have, maybe I could find a sponsor in the self-storage business. Maybe I could find a sponsor in the senior living business. That was kind of my mentality. And so I didn't want to try to go and compete with all these operators. I wanted to find one operator or a couple operators that I could partner with to leverage their background, their execution, et cetera. And so I found a mobile home park fund that I felt was a really good investment thesis. And I'm sure a lot of your listeners now are familiar with the mobile home park thesis, but you know, back in 2010, there weren't a lot of people talking about it, especially not for free. Um, so it was difficult to find people that actually knew about it, but I found an operator that had done a hundred million dollars of deals, had a great track record. And I started to talk to them about what would it look like to partner with them? And they basically were just very upfront with me. They're like, we don't need you to learn how to like find good markets for us. We don't need you to tell us what a cap rate is. There's one thing that you will get a seat at the table with us or anybody. And that's if you can bring money to the table. And I was just like, okay, like all these real estate courses about underwriting and property management and talking to brokers, those are all necessary skills. You have to have those skills to be successful, but they're not hyper scalable skills. They're not the X factor in this industry of private equity. The X factor is who can show up with the money. And so once I understood that, I was like, all right, so if I want to accomplish incredible things in a short period of time, I need to focus on the highest leverage activities, the ones that will get me a seat at the table. And so the first thing I focused on once I understood underwriting property management, et cetera, was going all in on the marketing and sales and capital raising side of things. And that's how I partnered with my first operator was showing up with some money to the table. And just at the most elementary level, when we're talking about creating a fund, just that word fund, what is this? Is this like a bank account? Is it a business entity? Is it a end-to-end business where you find the deal, you source the deal, you underwrite the deal, you manage the deal? What is this fund that we're talking about? To be honest with you, it's a good question because that term gets thrown around a lot and there's a lot of nuances. There's a lot of technical ways that I can answer that question, but I'll put it this way. The main way people use the term fund in the world of real estate is to describe an investing entity that can purchase multiple different assets. Now, that's not a technical definition of the word fund, but I'm just saying in the case of most real estate operators, if they say I have a fund, it means I created an investment entity. That has an investment template and we can buy all the deals that are in that template for my fund, usually over a certain time period, call it 12 months or something like that. That term though can be misused a lot, but that's the way that I like to use it is describing when I want to have multiple different assets or properties or ventures into one investment entity, that's the term I would use. Does that make sense? Yeah, no, for sure. Appreciate you spelling that out. And based on what you were saying previously about working with operators and that kind of thing. So it almost sounds like, like, where does the work of your fund stop? Like, are you actually finding the deal and working the deal? Or are you just finding somebody else that finds the deal? Like how far do you go in this process? So good question, but I'll, I'll just be transparent. So I have raised quite a bit of money for funds, tens of millions of dollars. But because my current business model is to buy assets that are around the $20 million range, I actually don't manage a fund anymore. I don't raise capital for my own fund. I only raise money for deals that we're doing and we do them on a property specific basis. So going back to what I was saying about the definition of a fund in this case is like pulling investors together to buy multiple assets, right? So I don't do that anymore. And we can talk about some of the reasons why, but one of the reasons you would want to start a fund from my personal perspective is if you have assets that are usually in the, let's say, $100,000, $300,000, maybe $500,000 range, you don't want to create a new LLC, new legal documents, new joint venture agreements every time you do a deal. So it makes a lot of sense to create a fund so you can have the economies of scale of using one of all those things to buy multiple assets in one vehicle. So having said all that, do you want to respond to that before we go further? Because that's actually the reality. I have found that a fund can be a headwind in your business because look, if you're trying to raise money, the number one thing most new people struggle with is trust and credibility. And if you say, Hey, listen, man, I've got this fund. It's a black box. I can't show you the exact assets, but trust me, they're going to be good. It just increases the level of trust that's required to get someone to fund. And this is even true of someone like myself. Like I would much rather not make it more difficult for me to raise money. So anyway, that's what I think about that topic. Gotcha. So when most people talk about a fund, they're talking about that black box scenario, but what you do is more of a per property basis. Correct. Where there is an entity per property and you're raising funds for that specific deal. Yes. And the reason I mentioned that the properties that I purchased are $20 million is that I'm not so worried about getting the economies of scale of having one LLC. You know, it's worth it for me to have one LLC per property, but for your listeners, let's say you're buying land, which I know a lot of your listeners do, depending on the purchase price of that land, I may or may not be a proponent of you thinking about creating a fund. I think that once you're talking about buying properties that are like $2 million or more, I'm like, listen, man, just eat the cost, create a new entity, et cetera. But that's just my personal perspective. There's people that have made way more money than me that disagree with me, but I've kind of seen it on the front lines because I teach people how to raise money and especially new people, it's very difficult to get new investors to fund into new operators, new funds without big proof of concept and long track record. Yeah. Gotcha. The ones that you work with, or maybe it's a mixture of both, but do you recommend or see more often of the 506B offering or the 506C or like what's, I don't know, any preferences or thoughts on that? Okay, cool. So just for context, when you raise money, there's a couple ways to raise money. The easiest way to raise money is as debt. And in real estate, it's commonly referred to as like a hard money loan. So let's say you buy a piece of land and it's worth $200,000. You're like, yo, I want to buy this piece of land. I think it's going to create a 30% return to me. So I will go out to some friends and family member and say, hey, I want to borrow money at 8% and I can buy this property. So the property is worth $200,000. I'm going to borrow $200,000 at 8%. I'm going to buy the property. Then in the event that you, the borrower, don't pay the person the mortgage or the monthly payment, they can foreclose and take your piece of land. That's what's called a hard money loan because the loan is collateralized by a hard asset, in this case, land. Now, the next more complicated way to raise money is a joint venture. In this case, you're like, hey, man, I think this property is going to produce a 30% return. You go to your friends and family and say, hey, listen, there's no loan. You're not going to lend me the money. How about you put up all the money? I'll do all the work. And, you know, renovate the land or even re-entitle the land. And at the end, we'll split the profits 50-50. So you thought it was going to generate 30%. You split it 50-50. That person gets 15. You get 15. But in this case, there wasn't any debt. There wasn't any monthly payment. They're basically splitting it differently. You can see how the investor in that case is taking on a little bit more risk, but the upside's higher. You follow me so far, right, Seth? Absolutely. Because I'm getting around to answer your question, I promise you. My guy set the stage. The next more complicated way to do this is that you're like, listen, it's not a $200,000 piece of land. It's a $21 million piece of land. It's a massive subdivision in a prime market. I don't want to be able to force myself to find one $21 million investor. I got to get like 100, 200K investors. Right? And so at that point, you do this thing called a syndication. And when you pull a lot of investors together like that, and they don't have control versus a joint venture where they might have control, you're getting into the world of creating a security. And this is a significant shift in terms of the legal structure that's required to do this. When you're pulling a bunch of people together, it makes sense, right? They're deferring to your expertise to do the right thing to some degree. The SEC and the legal system view that as a quantum shift in the burden of you doing the right thing in the legal documents associated with that. So when you create a security, if you have something like 20 investors in a deal, usually, or most attorneys would say 10, you either have to go public, which y'all are familiar with that. If Tesla wants to raise money, they have a public offering, or you have an exemption from that qualification. What Seth was asking about is two of the most popular exemptions from going public when you're raising money as a security, which is 506B or 506C. Now, Seth, I want to apologize because I know you know all of that. No, you're actually, I'm glad you're doing this. Usually I'm the one that has to explain this well, but I didn't and you're doing it perfectly. So keep going. Well, I see where it's going. And because I have done a thousand podcasts, I can see sometimes where people go, wait a minute, wait a minute. So again, you know that. But now again, like for anyone that's following along, those are kind of the three options. And when you do this whole security offering, you have to go with these requirements of those exemptions, meaning that there's formal guidelines. And so what Seth is acting is, do I prefer 506B versus 506C? Real quick, the benefits of 506B as in boy are as follows. You can have up to 35 non-accredited investors in your deal. The potential downside though, is that, well, basically you can't generally solicit. You can't go on a podcast and say, Hey, you guys, I'm raising money for this deal. There's a lot more nuance, but that's mostly the ones that are sticking points. 506 C as in Charlie, you're able to go on a podcast and say, we have a deal available right now. And here's the details. But the hurdle is that all the investors have to be accredited and they can't just check a box saying that they're accredited. They have to have a third party, like a CPA generally say that they're accredited. Now, from my perspective, I like being able to say what I want, you know, and I say a lot on a recorded device. So I like to be able to say, Hey, you guys, I got a deal. It's in Phoenix. It's a $20 million purchase. And we target a 15% IRR. That's not true. But if it was, you know, I have to have a five or six C in order to do that. And so if you really want to scale, I first, I suggest you only work with accredited investors in the first place. So it's not much of a downside to me, but when I got started, you're sure I work with non-accredited investors. You know why? Because you get started, You got to do what every entrepreneur does, whatever it takes. But if you want to build a more scalable business, I prefer the 506C. Most of our clients use 506B, but hopefully later in their careers, they'll probably use 506C. I imagine when it comes down to doing this well, raising money. It's probably somewhat of a numbers game, just getting in front of as many qualified people as possible and presenting information and asking for money. I guess first question, is that correct? I remember missing something, but if that is correct, how do you do this at scale? How do you find as many people as possible who are likely to have the money and want to invest the money in what you're trying to do? How do you do that? Earlier, I talked about how my first deal is I brought someone a half million dollars. I kind of glossed over the fact that it really wasn't that easy. I had this great deal, great operator. I had, I'm very lucky to be in Memphis from a family where I knew accredited investors, and I was able to get 30 accredited investors into a room on my first pitch. And I pitched this deal, which was the deal of a lifetime at the best market timing in the history of the United States. And, you know, I promised this operator I'd give him half a million bucks. I gave this pitch. People were falling asleep. Not one person wanted to invest with me. And I was like, totally blown away. It was a great deal. I mean, it produced 10% cashflow a month one. And these are people that are investing in like CDs. I was like, are y'all dumb? But it's not that they were dumb. It's that they had no interest in this, you know, in the same way that like, and I use this example in my book, but like, if I were to call you and be like, I found a dairy farm that's at a 70% discount. You're not going to look into it. You're going to be like, I've got other things to do because you're not a dairy farm investor. And so for me, that was the thing, right? They came because they're friends and family and they wanted to be nice to me, but they're not going to send their hundred grand to me. And so that's how my career got started. The point is those people all knew, liked, and trusted me. And so you hear this all the time. As long as they know, like, and trust you, they'll move it forward. Not true, right? They have to be competent. They have to be confident. They have to be excited. There has to be urgency. They have to be comfortable with the knowledge that they have. These people didn't have any of that other stuff that matters way more. So I decided I never want to pitch in a room with only 30 people. I probably don't even want to do a live pitch ever again, if I'm being honest. Instead, I want to attract people that are already interested in this topic. I don't want to do it in a one-to-one basis. I want to do it in a one-to-many basis. How can I do that? And there's a couple of ways. Obviously now it seems silly because the playbook is so clear now, but when I wrote my book just five years ago, it was not. And so the playbook is one-to-many selling podcasts to create, nurture, and educate relationships, lead magnets like eBooks and checklists and downloadable reports to generate leads, follow-up sequences like webinars and educational supplemental information, and then eventually create urgency and scarcity and book calls and close deals. And that's exactly what the playbook is today. And that's how you do it at scale. Okay. Now, did I hear that you use LinkedIn to generate leads? Right now, that has been the best way that our clients have been having success. And the reason for that is that LinkedIn allows you to target people based on their title and job description. It allows you to DM them, which is extremely good for connecting. And the likelihood of someone opening a DM is way higher than the likelihood of them opening an email, the likelihood of them responding to your DM is way higher than them responding to an email, then you can send them a video where you can build credibility and build a relationship and then prompt them to book a call. And so the fastest way that we've seen people have results in this business now is having a really good LinkedIn profile, creating content that will attract their dream client, DMing people that are capable to invest based on their job description and title, and hopefully a tie-in to your background and where you came from and then, you know, pushing them further along the line. So that's kind of something that we've uncovered over the last couple of years. And it's been absolutely awesome. So I might just say, what kinds of job descriptions and titles would reveal the most qualified people? Like what exactly are you looking for? Well, rather than just say like, look, CEO of, you know, Apple, which is like, okay, duh. It's a lot better if you like come from a corporate background or have a tie-in to a corporate background because it's going to have their hesitation to answer a DM drop dramatically. So for example, my COL used to work for Deloitte. If he wanted to go start his own thing and become a capital raiser, I would be like, look, go to middle management and above Deloitte. Those guys are making hundreds of thousands of dollars a deal a year. That's your background as well. And that's a good in because what people are doing at Deloitte is, yeah, they're making good money. They're getting murked on taxes and they're not really getting closer and closer to a financial freedom, that message would really resonate with a lot of people that went to Deloitte. You know, they spent a lot of money on college. They got this great job. And they're like, dude, I'm, I'm 38, I'm 42. And I feel like I'm 30 years away from my financial goal. Who, like what's going wrong? And then you get this DM that's like, Hey, let me guess you're 42 years old and you're feeling like you're decades away from your financial goals. It's like, well, yeah. Well, have you ever invested real estate? No. Well, watch this quick nine minute video. I'll break it down, right? That's a good way to get it in there. So I guess you sort of have to get that information and then use that to sort of come up with an intelligent first message to them. It's not just like a blanket canned thing that you send to everybody. Totally. You can spray and pray, but the issue is that y'all see those messages on LinkedIn and you don't ever answer them. The crazy thing about when you do marketing correctly is that it's a magic trick that you don't even know you're at a magic show. And so sometimes I'll talk about the strategies that we implement and people will be like, that's not going to work on me. I'm like, why do you think we're at this meeting? Because it's working. It's just working so well, you just don't feel like it's that, right? So the answer is yes. And the more intentional you are, the more you speak to someone's soul, the more likely you are to get a response, especially in today's world where there's so much noise, there's so much nonsense. You really got to learn how to tap into the pain points that your best clients have, tap into the goals that they have and kind of lead them to where you want them to go, which is, you know, investing with you or doing business with you. Are you using like some special software to send out these DMs or is somebody like at the computer doing this manually? How does that work? So we have a lot of staffwares that we use. We actually built one as well. So it is kind of like behind the scenes. I've not really talked about this publicly, but yeah. So we have something called raising capital.io, which is like our entire like automations machine that basically does what we teach. If you go to the website, there's probably like nothing there because it's kind of behind the scenes, but we do have clients that are testing it right now. And it's absolutely crushing it. And in short, that is kind of like a combination of a lot of things, right? Like an email provider, two-way text messaging, LinkedIn stuff, social media management, reputation management. It's quite robust. And yeah, it's, you know, you should for sure have some version of all of that. And that's why we created our own basically, because we saw that there's a lot of stuff out there and there's people are paying way too much for all this stuff. But listen, if you don't have an email provider, then if you're not using text messaging in your marketing, you're leaving a lot of money on the table. So like that's an instant action item right now. Start using text messaging, especially two-way text messaging. And you're going to see again, way bigger open rates, way bigger response rates. And what does that mean? More calls booked, more money raised. On that whole note of booking a call. So I assume there's some kind of qualifying you have to do with these people on LinkedIn or texting or wherever you're finding them to know if they're actually the right person to be talking to. So how do you qualify them? Like what kind of information do you need to verify before you take the time to get on the phone? What I've been doing recently is I will do like a nine minute video, not a personalized one, but like one that. Is generally personalized because I try to cater to very specific people, right? So as an example, if you were to do a video, that's like, Hey, I'll give you an example. One of my, one of our clients went through a multi, like a personal multi seven figure IPO. And then he did it again with a different company. So he's like, Oh my gosh, like, you know, thought he won the lottery. Then he figured out kind of the playbook and then did it again. And then, so he's sitting there, he's got like multiple seven figures in a bank account. and he's like, what do I do with all this money? Which is a unique problem to have, but that's how he got into real estate because he wanted to turn that cash, that lump sum into cashflow. So it was a pretty interesting experience. Then he wrote a book about it. Now you hear this and you're like, okay, cool. Got it. Well, not many people relate to that story, but the ones that do have a lot of money, right? And so if you were to do a video and basically, and this is going to sound silly, but isn't it a weird feeling and doesn't it feel kind of uncomfortable when you have like $8 million sitting in a checking account, not learning any interest. If you were to do a video that starts like that, most people are going to click away because they're like, uh, no, it's not weird. I would die for that. But there's a couple of people, maybe they went through an IPO, maybe they sold their company. Maybe they have a very large inheritance or something like that. They're going to watch the first 15 seconds of that video and be like, oh my gosh, how is this guy speaking to my soul right now? And to have those people with that net worth feel, oh my gosh, this person's speaking to my soul. It's like that can create a very high buy-in client. That's not going to go around and be like, oh, Hunter sent me this video, but I'm sure there's like a lot of other hunters around there. Let me Google around. No, he's going to be like, I can't believe I found you. So that's for him. That's what he does. And like a lot of our messaging will, will do a lot of the qualifying for us. You know, I'll give an example. Like earlier I talked about how if you're a good marketer, it feels like you're not at a magic show. Well, I'll give you a perfect example. I talk about raising money, right? When I talk about raising money, I use messaging like never scramble for capital again. I use messaging like, are you sick of dealing with friends and family and ready to scale? I'm solving the problems are people that are very far along the lines in their customer journey, right? They're not trying to make their first $3,000 in real estate. They're like well along their path. And so what does that mean? They probably, I don't have to convince them that real estate's a good play. I don't have to convince them that they should start doing deals. I don't have to convince them that this is potentially very lucrative. They probably have money. They're already emotionally bought in. They're financially ready to make an investment. And then here we are helping them scale. Does that make sense? Yeah. So I would want you to do the same thing. If you solve the problems that rich people have, you will likely be able to get rich. If you solve the problems of poor people, it's very difficult to get rich. Not that you shouldn't do it, but that is a place for things like charity and philanthropic stuff. And that's my personal perspective on that. But if your messaging is catering to people that have like advanced late customer journey problems, you'll be able to help them along the way. I'll give you another example. It's kind of silly. If you have a thing for boating. And you're like, doesn't it suck when you've got two boats and you only have one place to park one? And people are like, what? No. Well, somebody with two boats can be like, heck yeah. And that guy is probably going to have a lot of money. So it's like those types of things do a lot of the qualifying for you. And of course you can be like, just to clarify, I know we're in the yacht club together, but are you a credit investor? You are? Cool. Click here to book a call. So it sounds like you're looking for some fairly small elite groups of people out there, like a tiny percentage of the general population. I'm curious, like if you could name the top three or five most beneficial groups to cater to or profiles or avatars or whatever you want to call it of the right person? Like, who are these people? Like, is it yacht owners or is it doctors or like, how would you categorize these people? So first of all, you're right. And that's what the messaging is suggesting. But what you'll find is that there's so many more people that are not at that level that even if you crank your marketing up all the way, like my friend that went through the double IPO situation. Most of the people that opt into his free ebook don't have $20 million. Right? Because almost no one has $20 million, but it's aspirational. And it gives you the opportunity to set the bar very high so that people start doing calls with you. And they're like, I don't know if I can work with you. I only have a hundred K to invest. And you're like, well, good news. That's our minimum investment. It just sets the tone very differently. So I'll answer your question directly, but just think how different it would be if our messaging was like, Hey, are you sick of not being able to pay your bills? Here's how to make $3,000 in real estate. Who's going to be booking calls with us? We're catering to people that necessarily don't have money and people resonate with that that don't have money. So it's not necessarily the case that we would only want yacht owners to opt into our free downloadable report about the economy. But it's people that see themselves there in three and five years. And so that way, you can kind of set the bar high. You're never going to do in this industry of raising capital, You're not going to do yourself a disservice by setting the bar high, right? Another perfect example of this is realtors. Realtors are entrepreneurs. Realtors are self-starters, but there's a lot of broke realtors out there. And there's probably a lot of people listening right now. They're like, yeah, that's true. So we have clients that want to cater to realtors. I suggest they use, hey, top 1% realtors or top 0.1% realtors. And yes, you're going to get a lot of those top 20% realtors, but hopefully the people that are like trying to make ends meet aren't going to be opting in. And you can search for that just like on LinkedIn. Like you can just type that in and that'll show up or... Not exactly, but let's say that someone that's been with Remax for 12 years or something like that, right? Not someone that's just getting started. And another thing would be their titles, right? Are they a director? Are they a manager? Are they C-suite? Those things matter a lot, especially when you know the company, right? I mentioned Deloitte, very large company. People know how much they make. You can just Google it. And so that'll give you a good head start. Yeah. I know there is a service called Versium that I've talked about before. I'll put a link to a video in the show notes. Again, retipster.com forward slash 203. But they're a service that allows you to skip trace, but also see demographic information about people. And you can segment people based on their income and their credit score. So you could say, hey, I only want people that make over X number of dollars per year and a credit score of 800 or more. I mean, that might be one way to like triangulate people who would probably fit the mold versus not, assuming it's relatively accurate. So I'm curious, what are your thoughts on getting funds from friends and family? It's a good idea, bad idea, or if you were to do this, what should you do upfront to preserve the relationship? It's generally a bad idea, but there's a point in most people's career where they have to try to do anything to get things going. And getting to your first half million or million is like a really difficult thing. For me, it was like raising my first million was way more difficult than raising the next 9 million, right? Not just because of like systems and processes, just because no one should invest with you on your first deal and they know it. So the good way to kind of hedge this is to go out to your friends and family and just know two things. Number one, that is not an indication of how good you're going to do, even if it goes well or poorly. Right. So if you go out to your friends and family and you've got some random uncle, that's like, Hey Hunter, here's a half a million bucks. You may be like, okay, it's on. I'm going to crush this game. I knew I was going to be awesome. Here we go. Uh, it's just not going to be replicatable on the other side. If all your friends and family are wealthy and they're like, no, we're not investing with you. Cause we don't want to mix money and business. That's totally fine too. It doesn't matter, but whatever you can do to raise your first half million, as long as you're working with a group that really knows what they're doing, you got to just push and pull and scratch and call and understand the risks. For what it's worth, when I work with friends and family early on, which I don't do anymore, actually not intentionally, I was always trying to focus on people where their mindset was kind of like, if they lost it, it would be okay kind of thing. And I kind of sold them on that and was like, look, just think of it like, look, this is normally the minimum investment is 50,000. I'm reducing it to 25,000. My hope is that I can return this money plus some in five years, but I want you to be very comfortable with the risks. That's what it sounds like. Now, it's easy to listen to that on recording and nod along and be like, yeah, that's right. But when you're really trying to make your career happen and you need to raise a half million, it's difficult to speak like that. But when you speak like that, you're far more likely to actually raise the money because the neediness is turned down a lot and it'll set the expectation where people aren't going to be panicking during the five-year hold period. I actually just thought of a question I should have asked like five or 10 minutes ago. And you were talking about that nine minute video that you send people as an introduction. I'm curious, do you have like any examples of that you could share? Thinking through the minds of our listeners, I mean, just even myself, it'd be interesting to see like, what does that template look like? Like, what exactly do you talk about? What do you show? Are you showing your face on the screen, a property? Like, do you have anything like that you could share? So two things. One, I'll give you the pay version. The other one's the free. And you can always pick, If you pay, you get it faster. If you get it for free, it takes a little bit longer, right? That's the whole thing. But we're doing this event called RaiseFest, which is where I'm going to break down that specifically. It's called Video Sales Letter, where it's a short micro webinar. I'm going to give away a template. I'm going to give some copy and paste stuff that you can implement in your whole business. You can learn more about that at raisefest.com, R-A-I-S-E-F-E-S-T.com. Depending on when we launch this, we're probably about to raise... The price of the ticket. So run over there, check it out. Now that's the paid version. The different version of this, and you can do this with anything that I do is just go opt in to something I'm doing. If your listeners go to my Instagram, for example, which is Hunter L Thompson underscore, I will start targeting you with ads. And when you see my ads, don't be like, God, this bald guys keep spanking me. Opt in, opt in. Cause you're going to see what we're doing on the backend. Now you're not going to see the whole thing. And that's what kind of our whole coaching program is all about. It's not like I'm trying to hide this from you can go and opt in and see it. But yeah, that's the easiest way. And that's not just true of me. That's true of anyone. If you see an ad that's popping up on your screen all the time, remember that Tai Lopez ad where he's in his garage and he's like, a lot of people always asking me how I got these cars. Well, dude, that video, I got like something ridiculous, like 40 billion views. It's like, it's like unheard of. Now, before I got into the world of marketing, I didn't understand that. I'm like, get off my screen. But now I'm like, the reason that ad was running like that. And the reason it kept running for years is that it kept working, meaning that the ad budget was negative, meaning that they would put in a dollar and get three back. So then they said, well, how much can we spend? And they just cranked it up and cranked it up and it worked for like 10 years. So if you see me running an ad, especially if you see me running the ad more than once, opt in and see what happens in your DMs and just go through it. And that's, like I said, not just true of me, but anybody, not just in real estate, but at any ad what's happening, what they hook me in, how they get my attention. What was the opt-in? Was it a lead form in Facebook or did they take me to a page? Was there a video? How long was it? What did they say in the first 15 seconds? Like this is what elite marketers are doing all day because the playbook is sitting there in front of you. Yeah. Wow. That's so simple and brilliant. I don't know why I haven't. Actually, I have thought of that. I've just never actually followed through. I don't know why I haven't, but I'm What had you said? I kind of just corroborated what I've thought for a while. Can I help you out? Because there's more. I mean, this is like the whole playbook of marketing is modeling what works. And so if you go into, just think about it again, whenever you feel like, oh, this person spamming me, be like, wait, am I capturing this? Because something's happening in their business that's working. That's why this is happening over and over again. So if you know someone that's done a ton of land deals, dude, opt in to their platform. See what their emails look like. listen to their podcast. I mean, you can take it to the next level, which I have done many times. Seth, you may know someone named Russell Brunson, who's a mentor of mine. He's the guy that wrote dot-com secrets, expert secrets, traffic secrets, and many other books. I would consider him to be probably the most influential marketer of all time, given the success of ClickFunnels and his role in all of that. So what he talks about is like opt into everyone's stuff even if it's in like a free Gmail account and just create a folder that itemizes each great marketers emails. And then you've got like in a year, you've got like 10,000 emails for all these great marketers. If you need any inspiration, you can just click, drag and drop. And that's one of the greatest things I learned about him is like, you don't have to be smart. You just got to have good eyes and good ears. And that's what good marketers do. Well, that's interesting. I mean, it's probably easier now than ever because with a chat GPT and the ability to build custom GPTs based around a single marketer's copy and that kind of thing. By the way, we talk all about this pulseinnercircle.com, cover this stuff pretty much all the time. But if you know how to do that, I mean, you can basically have the emails and stuff written for you. I mean, it probably wouldn't make videos and that kind of thing necessarily yet, but yeah, that's great tip, man. I think you can absolutely upload a bunch of Russell Brunson stuff to a chat GPT and say, here's this content I'm trying to write. How would write this in the voice of Russell Brunson? You can actually do that on chat GPT with no training because everyone knows who Russell Brunson is. But the reason I brought up Russell is that I took it to the level where I would listen to his webinars. I would download the audio version. I would upload the audio version to something called rev.com to transcribe them. And I would read them. And then I would write my webinars word for word like him, not copying modeling. Of course, people are like, oh, I get it. It's Russell Brunson webinar, but it still worked. And to the tune of on my coaching business, RaisingCapital.com, you know, we went from zero to 10 million in revenue in 31 months doing exactly what I just outlined. Well, on the, uh, going back to the raising capital subject, I am curious, do you think it's easier to find many people who can invest a little or a few wealthy people who can invest a lot? Like, would you rather have a deal, you know, that requires a hundred people to do it or five? Ooh, five is a good number. Let's make it more extreme and say one. The reason I say one is that that's a really scary number, particularly because obviously it's binary. They write the check or they don't. And so what ends up happening is when you have a $20 million deal that requires $10 million of equity, and one person's going to write that $10 million check, they know that they're bringing a lot of value to the table. And so they ask for control rights. They're able to kick you out. They're able to tell you when to buy and sell the deal, usually speaking. And most importantly, they've got a intense team with a robust due diligence process that at the end of the day can waste your time and then not write the $10 million check. And then you've got a $10 million hole you have to plug. So it's referred to as like chasing elephants using institutional money or family office money can have challenges. But let's say that instead of having one $10 million check writer, you had like four, whatever the math is, 2.3 million dollar check writers or whatever, you know, that I like a lot more. but. I built my business focusing on 50K, 100K, 200K check writers because my predictability of success is just way higher because I have diversification, not just of the investments that I do, but of the equity that I'm getting. I have diversification of equity, but it's a really good idea to have both. You want this foundational base of like hundreds or thousands, or in some case, hundreds of thousands of people that know who you are. And you have this funnel that's working through the process to give you that 50K, 100K, 200K. But the good news is the same systems and processes and funnel work to attract people that have $35 million, $100 million net worths. And even though they like to think it doesn't, it totally does. And so you can implement the exact same strategies and attract those kinds of people. So I like a good mixture of both. Gotcha. No, it's great. Can you tell me a little bit about this fund of funds strategy? I think I heard you, or maybe it was Pace Morby talking about this, how this is the cheat code for breaking into large scale real estate deals. What is that? So first of all, Pace is a good friend of mine and he definitely like, look, he's done some incredible things in this business. I got to give him a shout out. But one of the reasons I got to give him a shout out for us, he gives me a lot of credit for popularizing this term. Not to say that I invented it. I totally didn't, but I definitely played a role in its recent popularization, me and a couple other guys, right? And what this is though, it's been around forever, but people didn't really understand why this is so powerful in this climate, which is that. It is a way of finding an operator who's running a very specific playbook that they've done over and over again, whether it's self-storage, mobile home parks, buying land, whatever. They've got their track record, their experience, their relationships, their software, and they're just crushing it. And you go to them and say, hey, listen, rather than try to compete with you and rather than try to partner with you, because I know you won't make me a partner of your firm because you're doing all the stuff that I'm not doing. How about this? If I were to show up on your doorstep with half a million dollars. Would you allow my investing entity, that one that I'm about to give you half a million dollars with, would you allow that entity to get economics that are like 20 to 30% better than a typical 50K investor? So basically, if you were a fund of funds manager, you create an investment entity called an SPV, a special purpose vehicle or a feeder fund or a fund of funds, and you pull 10 or 20 investors together into that feeder fund. And that feeder fund feeds $500,000 or a million dollars directly to the sponsor, the owner operator. And because of the fact that I'm showing up with a million dollars as a feeder fund manager, as an operator, I'm probably going to give up 20% to 30% of the economics to flow through to that feeder fund. And at the feeder fund level, the fund of funds manager, the feeder fund manager can just take that extra 20% to 30% And the investors basically get the same economics as if they had gone direct, but the fund-to-funds manager gets to keep the 20% to 30%. Now, did I say that in a way that was too confusing or did you follow along? I think I followed it, yeah. I'm getting it. So think about it like this. Let's say a typical investor would get a 10% return if they invested 50K. If I'm a doctor and I know a lot of doctors, I'm going to be like, hey, all you doctors, I created a feeder fund to invest in this other deal. Invest 50K with me. I get to a million bucks. I then invest that million bucks with the operator. And he says, instead of giving your entity a 10% return, I'll give you guys a 13% return. That 13% goes from the operator to the feeder fund. At the feeder fund level, the feeder fund manager sends his investors 10% and keeps the 3% annualized. Meaning if you raised a million bucks on average, you'd make $30,000 a year, which is 3%. Over a five-year period, that's $150,000. It's a pretty good way to make money because all you're doing is pulling those investors together and you're not really doing any of the work associated with managing the assets. So that's the thing. It does make me wonder though. Is there like a dark side or ugly side of that whole setup being a feeder fund that contributes to almost like creating this degree of separation that wasn't there before? Because you can't actually control that specific deal. You're trusting somebody else to do it. I mean, does it ever backfire become a bad thing? Or is it just about picking the right person in the first place that's better than you would be in the first place? Look, man, this is a gnarly business. So any question like, has it ever backfired? It's like, you damn well know it has. You know what I'm saying? Like any, anybody will say that's true about borrowing money, doing deals, taking people money from others and putting into deals you think are good. That's just the nature of this business. There are some unique risks around the fund of funds model. One of which is the lack of control, right? So what you're saying is if you're a fund of funds manager, it opens your eyes that now all of a sudden you can offer your investors an investment opportunity in any asset class in any geographic location. Because all you got to do is find someone that is in those respective niches, right? But in exchange for that diversification comes a lack of control. And so it's a balancing act, right? You have to decide what you want to do as a business owner. Do you want to take on that lack of control, that third party risk in exchange for diversification, or do you want to be more focused and specialized in one niche? And so this is something that I did through my career, raise money for other people's deals. And then, like I said earlier, in 2022, we pivoted our business to now we are the operator. We only buy deals directly in Phoenix, Arizona. And so I did deals with people that are so inspirational that I am honestly intimidated by that have systems and operations and returns and track records that are just like, geez, like that's really something. I've also seen people that do stuff where I'm confident they're going to go to jail at some point. Like, I don't know when, but it's probably going to happen. And that's the spectrum. What's out there. You do enough deals, you'll see some crazy stuff in this industry. And the uncomfortable part is that even when you really know what you're doing in terms of due diligence, that was my background, you still see things where these are long-term seven-year investments and people can change over seven years. And so you just got to understand that that's a risk. And even when people are heavily incentivized to do things right, people bomb their careers sometimes. Sometimes people bomb their careers, people bomb their marriages, people, you know, people do crazy stuff over a five to seven year period. And that's a risk that if you're a fund to funds manager, you're not an owner operator in that group, you can't correct the ship. Now in all fairness, that risk is very relevant in any deal that you're not the controlling member. Meaning even if you are a partner. But you're not the controlling partner, that risk is extremely pronounced still. People don't want to admit that. But listen, if the LLC is split 49-51 and you're on the 49 side, it might as well be split 100-0 in terms of voting rights. So that's a risk that some people are taking without knowing it. But the fund of funds thing, it's a little bit more pronounced for obvious reasons. Well, I'm curious. You mentioned that you're going to find people who will probably end up in jail someday. Why do you think that? Or I guess a better way of asking the question is how can you detect and avoid those people who are probably going to end up in jail someday? Like, is there anything we can do from the outside to see, okay, you're a problem. I'm going to avoid you. Yeah. There are things that you can do, but like any due diligence process, it has its limitations, right? So like, I'll give you an example, like our due diligence process is extremely robust. So in the past, though we don't do this in the more in the past. We would be investing with other operators. So of course we're going to do things like go on site to the property, pull title on the property, check the train of LLCs from one entity to the next. We're going to run criminal checks, background checks. Not only going to talk to previous investors, we're going to talk to insurance providers and property management groups. We're going to talk to just, you know, a typical due diligence process. We're also going to meet the sponsors on site. We're probably going to get to know them and get to know their families. This is sometimes, and this is not an exaggeration, sometimes it's going to be a multi-year process because when you do deals with someone, you're betting your career to some extent on this third party. So there's no reason to try to run and gun this whole operation. You need to take your time with it. I'll tell you, lack of organization is a real red flag because what can happen is that when you're unorganized. Things can start to slip through the cracks. And when things slip through the cracks in the world of private investments, people do stuff behind closed doors, that's difficult to detect. Maybe they're doing it to make things right, but lack of organization, lack of cashflow management can create these pinches where the world of private investments, there's no audited financials. If people move money around, it's possible, not legal or moral, but it's possible to do things that are uncomfortable and then only comes up if everyone gets sued and everyone gets subpoenaed. So the precursor to that is not only having a deep relationship, not only have an emotional connection, not only feeling from a gut perspective that they're correct, but criminal checks, background checks, et cetera, but also just from a gut feel perspective, is this a scalable enterprise that is extremely buttoned up in terms of their organization so that they don't get squeezed and have to make some weird, uncomfortable decisions? If you're talking to one of these people and your goal is to find out how organized are they? How do you know that? Like without actually seeing behind the scenes, like does Is it just kind of come up on accident and then you know, or is there something you can proactively do to determine whether they're organized or not? How large is the organization? How many employees do they have? How much of the business model is a rinse and repeat for them versus new business initiative? So for example, if there's a self-storage owner operator that has 20 deals and they're buying their 21st deal, it's unlikely that this is going to cripple their business and make them have just a total can't sleep at night type of moment. They're just doing the same thing every day. But if they're a self-storage owner operator and they've done 20 deals and now all of a sudden they're about to do two hotel developments. It's like they got a new software, new people, new relationship. It's like, there's a lot of risk there. And I think that that's a silly example, but I actually see, you know, less extreme examples of that all the time. We view it as a big risk. The obvious one is, Hey, we've done 10 deals in Nashville. We're doing our first deal in Florida because it's a really good market. Like that to me is not rinse and repeat. And it's require new relationships, new brokers, new debt brokers, probably, and new softwares. And so anytime you're integrating with something new, there's a high level of stress. And that stress can lead to lack of organization, lack of sleep, you know, weird stuff. No, that's awesome. That totally makes sense. Appreciate pointing that out. I'm curious, the psychological aspect of raising funds and getting people to entrust their money to you, especially if you're not even 100% sure about a deal. I don't know if you get to that point where you're 100% sure about the outcome. Probably not. But it seems like it would create some stress and anxiety. It's like I've got millions of dollars. People are given to me. They have these expectations I got to deliver. Is there a way to compartmentalize or eliminate any of that stress or anxiety that comes from that? Like, how do you balance that mentally? Jeez, bro. I'll tell you, man. There's a story that I can't talk about yet because we can't. We feel like it would be a disservice to our investors because if people knew what we saw, it'd be hard to create a buyer. We saw something insane that is very widespread in a particular industry that I feel like once we sell the deal, I'll be able to come back on the show and talk about why no one should ever do a deal in this particular niche. But it created a level of stress in my life that in all fairness made me realize I had never been through anything in my life. That's really the key takeaway. It redefined what I thought it meant to go through something hard. Three years ago, if you'd asked me that question, I probably just, I wasn't in a position to answer, but I thought I was because everyone has a scale of one to 10, right? So three years ago, I had the scale of one to 10. It still exists. Now the difference though, is that what I thought a 10 was is actually not really even on the scale because when people would tell me, oh, I'm going through something difficult. I thought they meant my previous scale of one to 10. Now I'm like, was that what they freaking meant? And I want to provide some more context year because I haven't really talked much about this for obvious reasons, but I want to talk about kind of what that means. So I'm a 38 year old guy. I have lived a great life. Like I mentioned before, I came from a family where, you know, we, we weren't hurting for money. I got to go where I wanted to go with college without there being some massive conversation around budget. Like I'm very, very blessed for that. But of course I've had difficult things happen in my life. My parents went to a divorce at a very young age, which I think impacted me. I thought I was a slacker when I was growing up. I had a very cranked up risk return thing when I was 18, 19, 20, 21, all that stuff. But at the end of the day, I never really, I never, you know, I've had people pass away in my family, you know, just normal stuff that a normal person has, but none of that stuff ever impacted me. And because that stuff impacted other people. I figured I was just kind of one of those guys that wasn't impacted by much. Like, sure. Like I mentioned, oh, the divorce impacted me. It impacted me, but not to the extent, like I don't wear it on my sleeve. You know what I'm saying? Like it never really deeply got to me, but I dealt with something over the last couple of years that got to me. And so to the point of like, you know, feeling like you're going to have a psychological breakdown and maybe I even did like that, this really hard stuff. And now I realize that death's in the family, things not going well, whatever, that's not really like a triggering event for me. What is a trigger event for me is business. I take this game freaking seriously. And so now I am in a position to know what it's like to go through something. And so now I'm in a position to help someone who's going through something. So I wanted to set all that up because I've been talking on the radio for years, talking about, Hey, what to do when you're stressed out? I didn't know nothing about being stressed out. So here's, here's the thing. Number one, you got to get your sleep under control. That was one of the things that went early for me that I couldn't sleep, but you know, I wake up and basically throw up because of the anxiety and stress levels. So if it takes, you know, breath work, meditation, if it takes pharmaceutical intervention, whatever, you have to be able to sleep to recover from whatever you're going through. Like I would crank that all the way up on the needs list. The second though is working out. And so... If you aren't sending it in the gym frequently, you're probably leaving success and money and happiness on the table. And so when you do those two things, when you sleep and when you work out, everything starts to click into place way better. But I mean, sending it meaning like truthfully, when was the last time you failed on like a squat? Like, I mean, failed, like you have to, you know, bend over the bar bounces off the ground, like that kind of thing, or something similar to that. When was the last time you figured out what your max heart rate was? Like I think people should have answers to those questions because if you don't, you're not sending it now, it doesn't mean that as you get older, you're not like, uh, you know, you run the risk of injury and stuff like that, but like, you got to figure out what you're freaking made of, because if you do, and if you know what your max heart rate is and you know what your one rep squat is or whatever metric you want to use. And I genuinely mean that whatever the metric is, number of stairs done on the stair master, number of jump ropes you can do in 20 minutes, whatever that number is, then you did it. the worst thing that's going to happen to you that day. You did it, meaning that you are in control. And so for me, when I was going through that craziness, every now and then I would hit 207 on the heart rate max. And I know for sure that'll be the worst thing that's going to happen to me that day. And so it doesn't matter what else happens. I'm going to be in control of that situation. And that control, that agency starts to bring control and correctness back into your life. Plus when you max out on deadlifts, when you max out on squats, when you go full send, you have to recover. Your body demands it, meaning that you're going to eat right and you're going to sleep right. And so now you're starting to build this foundation for like what it can mean to get through something tough. Those are some of the things I feel that people need to hear. Awesome. Well, Hunter, I totally appreciate you coming on the show, sharing your wisdom with us. It's been awesome to talk to you. If people want to work with you or find out more, if they're interested in this whole funding capital raising thing, where should they go? Instagram is a good place to start. Hunter L Thompson underscore. You can also go to raisingcapital.com, which is our kind of coaching business. If you're interested in investing with us, asymcapital.com. And then lastly, I usually don't give away all this stuff, but I wanted to make sure people know. RaiseFest is going to be freaking awesome. Seth, you should 100% come and check it out. Thousand capital raise are going to be there. Honestly, if you come, the sessions will be amazing, but the network, because people there, I mean, we teach people how to raise money. People that are there know how to raise money. One conversation, you know, one partnership can easily pay for the investment of the ticket and the flight and all that stuff. So I'll see you guys there in Phoenix. Awesome. Sounds good. Thanks again, Hunter. Great to talk to you. Great to know you. And hopefully we'll talk again soon. Talk to you soon. You bet.