Real estate capital raising and syndication

How do I raise capital for build-to-rent communities?

You raise capital for build-to-rent by giving investors a clear story about who buys the project later, reaching them through people they already trust, and talking with securities counsel about the offering. Here is how I think about each piece.

Start with the institutional buyer

Everyone has heard that institutions are buying build-to-rent communities. It shows up in the Wall Street Journal every couple of weeks. At our Private Investor Deal Flow Expo I pointed out that, according to CBRE, multifamily is 25% plus owned by institutions. Single family residential is only 2.4% owned by institutions. That gap is the part an investor cares about, because it suggests how much room is left for large buyers.

In these opening remarks I explain the institutional trend that sits behind build-to-rent.

I also mentioned aggregators who are very incentivized to make it easier for institutions to buy a thousand homes or four thousand homes at a time in one package. Large buyers want scale. A community of homes in one place fits that better than scattered houses. Put that in your deck as your exit thinking, and be honest that it is a trend and not a promise.

Reach investors through introductions

Manny, who runs an investor club, shared a tip on a panel I joined. Look at the investments the group has already made. Have the founder of one of those deals reach out if you can. Try to get an introduction through a lawyer they work with or someone in their LinkedIn network. That puts you in front of people who are not just one more email in the inbox.

This panel covers what investor club leaders look for and how they like to be approached.

Manny also said to make sure your deal fits what the group funds. I agree. A build-to-rent sponsor should know whether an investor writes small checks alongside other private investors or looks for a co-GP JV partner. Deals of all sizes get done in our room. One was a $1.1 million real estate acquisition with a few smaller private investors. Another was a $250 million co-GP JV term sheet.

Talk through the structure early

Many sponsors talk to a securities attorney early about how to structure the raise and how they plan to approach investors. I am not giving legal advice here.

Before you meet investors, I would have these ready:

• A one-page summary of the community, the market and the business plan
• A realistic budget and timeline
• Your track record and the team that will build and manage the homes
• A description of how investors get paid and who the likely buyer is at the end
• A structure you have talked through with your attorney

Learn from people who have raised before

We host a workshop on raising capital most months. We also run Capital Con, where 25 speakers who have each raised $100 million or more speak for 10 minutes apiece on how they did it. Hearing the same lessons from many people helps you spot what holds up.

What I have said on this at our events

One practical point on your materials. I try to budget about point one percent of the amount I am raising for the deck and supporting documents. Better materials make you more credible and professional, and you often raise faster with fewer meetings. The larger the raise, the more detailed your materials need to be, and the more sophisticated the investor, the more concise they also need to be. For a build-to-rent project, that means a tight exit story and clear numbers that an institutional-minded investor can read quickly.

On the record

• According to CBRE, multifamily is 25% plus owned by institutions, while single family residential is only 2.4% owned by institutions.
• Capital Con features 25 speakers who have each raised $100 million or more, speaking for 10 minutes each.
• Deals closed through our room have included a $1.1 million real estate acquisition and a $250 million co-GP JV term sheet.

General education only. Not legal, tax or investment advice.

Talk to a securities attorney to explore options around offering structure, investor eligibility rules and marketing to investors. Do not use AI to write your own legal agreements.

Where to start

1. Write a one-page case for who will buy the community at the end.
2. List the investors whose past deals match build-to-rent.
3. Find a warm introduction for each one through a founder, lawyer or LinkedIn contact.
4. Talk to securities counsel about how to structure your raise.
5. Attend a capital raising workshop and test your pitch on real investors.

More questions on this

Related questions

• What do LPs want to see in a sponsor's track record?LPs want a sponsor they can count on.
• How much should a real estate sponsor charge in fees?A common structure I see is a 6 to 8 percent preferred return, then 20 to 25 percent to the sponsor, with higher splits above a second hurdle.
• How do I raise capital for a mobile home park?Raise capital for a mobile home park by teaching investors why the asset class works before you ask anyone for money.
• How do I raise money for opportunity zone projects?Start with a project that is already well built, then put it in the zone and show investors the real numbers.

Work through it with the ready to raise checklist. See all real estate capital raising and syndication resources.