Raising capital in real estate can be difficult when you’re starting. Newcomers tend to chase investors, but what you should really be doing is attracting them. To be successful, you need to get your first deal done! To help you get that deal are your host, Chris Larsen and his guest Dave Dubeau. Dave is a professional real estate investor, best-selling author and highly sought-after trainer and consultant. He has a system for attracting investors that he will share with you today. He will share his five-step money partner formula so that you too can attract investors. Learn how to raise capital with any deal, big or small today.

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How To Raise Capital For Any Deal (Big Or Small!) With Dave Dubeau

I’m super excited to have Dave Dubeau on the show. He is going to be talking about a pull system and process about how to raise capital and a special offer on how to get 50% off his course, as well as how to get his free eBook. He has been an entrepreneur since 1993 and a real estate investor since 2001. In that time, he has done deals ranging from creative no-money-down transactions, rent-to-owns and multifamily properties. He is the author of seven books and has been teaching and training people about marketing and real estate investing since 2006. He has also shared the stage with the likes of Robert Kiyosaki of Rich Dad Poor Dad fame, Robert Herjavec from Shark Tank, George Foreman, and many others.

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Dave, welcome to the show.

Chris, thanks for having me.

We had a great conversation beforehand. I always love having a guest on the show that are from Canada. My wife is from Canada and you’re way on the West Coast. She is from the Montreal area. For those who don’t know your background, maybe you could share a little bit with the audience how you got to this point.

I’m born and raised in beautiful British Columbia, Canada. After graduating with a mediocre result in university, unlike you, the smart guys that seem to pull the university thing, there weren’t a lot of job offers landing on my doorway back in 1990 with a Degree in Psychology in a 2.3-grade point average. I went and traveled around Latin America for a few years. I ended up in a beautiful little country called Costa Rica. I loved it too. I was 23 or 24 years old at that time and clueless at about $1,000 to my name. I said, “Why don’t I start a business here?”

I don’t know how I made a go of it, but I did start a language training company down there. Eventually, I met a lovely person, married, and had kids. I lived in Costa Rica for ten years and had a pretty good life. It was a lot of fun. In 2003, my wife and I decided, “Costa Rica is great, but me being the pasty-faced white guy that I am, whether you have money or not, there tends to be a bit of a target on your back. Everybody assumes that you’re a rich person.” In Latin America, there is a risk of you or your family being kidnapped and held for ransom. It doesn’t happen a lot in Costa Rica, but it does happen. I know two people it happened to.

We decided, “Our kids are getting towards school age. Why don’t we bring them up in Canada?” We moved to Canada, my 3 kids, my family, and myself. I moved back to British Columbia, but I had a challenge. The challenge was I hadn’t been able to sell my business in Costa Rica, so I didn’t have a lot of cash. I had been self-employed for so long. I was pretty much unemployable. I had been gone from the country so long. I didn’t have poor credit. I had zero credit. I was like, “What am I going to do?” I don’t know if you remember these things. Do you remember those late infomercials, “You too can get rich in real estate with little or no money down?”

Which one was it?

The one flavor I subscribed to was by a gentleman named Ron LeGrand.

I’ve read a couple of his books.

I set away with his course and this was way back in 2003. It was a bunch of binders and maybe even cassette tapes and VHS or CDs. I’m not sure. I went through all his materials and put it to use. My first little kick to claim the fame of real estate wise was I did eighteen houses in eighteen months in and around the small City of Kamloops where I live, which at that time had about 80,000 people in it. That was good at attracting motivated sellers. That was all fun.

I caught the eye and connected with an up-and-coming real estate guru up, the Canadian version of Rich Dad Poor Dad. He saw what I was doing in real estate. He saw what my background and passion was, which was around marketing. I ended up going on board with him and his companies and helped him grow from him and 1 or 2 people working out of his basement to 128 employees and seven branch offices. At the peak, they’re doing somewhere around $200 million a year in revenue with that company. That was fun for about six years and I took some time off from real estate.

In 2010, I got back into it. I started doing a slightly different strategy called Tenant-First Lease-Option or Rent-to-Own. We basically find a good tenant-buyer, go buy them a house, and lease-option it to them for 2 or 3 years while we help them get lined up for financing. That’s where I got my first taste of raising capital because, like most people, I sell finance in my first couple of deals and then hit that wall and ran out of cash and credit. It was like, “Oh crap.”

That’s when the perfect deal landed in my lap. I can remember it vividly because it’s such a painful experience. I remember this whole landing in my lap and we went out. We found them a house and got it under contract. Everything was tickety-boo. The only little hiccup was I needed $85,000 for the down payment and closing costs. I didn’t have it. I was already strapped, but I had always heard, “If you just find a good deal, the money will find you.” Have you ever heard that expression?

Absolutely.

I drank that Kool-Aid, but I figured, “I still got to do something.” It’s not like the secret or the universe is going to plunk $85,000 on my desk. I had also heard, “Dave, if you need this capital, pick up that phone and start Dialing for Dollars.” I had never done that before, but I figured, “I’ll give it a try.” I picked up the phone, dialed, and rejected. I would love to say it was like The Wolf of Wall Street. They ground it out and ended up raising them. I quit after about ten calls because my fragile little ego couldn’t handle that much rejection. I said, “I don’t like cold calls. What else can I do?” “Get out there, network up a storm and turn every conversation into a real estate conversation. Practice a 30-second commercial with your elevator pitch.” Have you heard that one as well?

Absolutely.

It’s with BNI, Chamber of Commerce, Toastmasters, and pretty much anywhere they let me in the door with my briefcase and a handful of business cards. I went and promptly raised zero capital.

This is why I’m excited to have you on the show because I talk to investors and my coaching clients. They’re like, “I’m going to pull some investors together for this deal.” I’m like, “Terrific.” They’re like, “I know 6 or 10 people. It will not be a problem.” I’ve always told people, “If people swear on their children’s lives that they’re going to give you $1, they’re good for about $0.50.” That’s what I love. You have that expression like, “If you just find a good deal, the money will find you.” I found an experience that’s certainly not the case.

It wasn’t my experience. My philosophy now is, “As your investor is lined up and ready, you go get your investor ducks in a row first, then find a good deal. That way, you’ve already got the money.” Bottom line, I think you know the end of the story. I wasn’t able to raise capital. I had to renege on that deal back out of it. I’m in a small l town, so that was some major egg on my face. It ticked everybody off, especially myself. Here’s the thing. I also turned off a lot of good investors because I was so clumsy about how I went about this.

One of the brilliant ideas that I came up with was I spammed everybody I knew with an overview of the deal. I thought, “If enough people see this, it’s such a good deal and it’s going to sell itself.” That’s not what happened. All I did was succeeded in turning a lot of good prospective investors off. It’s a painful story, but that sparked me in and I said, “After I quit sniffling, let’s use this as a learning experience. How can I avoid this happening again? What can I do to turn things around? Instead of chasing after investors, how about if I apply some of the smart stuff I know about money and see if I can figure out a way to attract investors to me?” By hook or by crook and over some time, I came up with what I call the 5 Step Money Partner Formula, which I’m happy to share with you here if you would like.

I’ve been through this process. I’ve talked about the story of our first deal that we syndicated. We started nine months before we had that deal under contract. It was about a full year with the process of talking to investors, explaining to them what was going on, and getting their buy-in. What I’ve found over time is that it takes a long time to do that. A lot of people reading the blog are investors. It’s interesting to see how the sausage is made behind the scenes, all the work that goes into it, and also the way things have changed over time. In your book, you talked about it’s important to break the ice first with people to establish rapport. What’s the first step in this whole process?

My first step is to create a target group of potential investors. My whole thought is to start with people that you already have a pre-existing relationship. You know them. They know you. It’s a logical place. I’m not a security specialist, lawyer, and accountant. I’m just a real estate guy and marketer sharing my understanding. If you do it on your people that you have that pre-existing relationship with, then A) it’s going to work a lot better and B) it will help keep you out of trouble with this pesky organization called the Securities and Exchange Commission, which you guys have in the States. Up here in Canada, we got our own equivalency, so we aren’t off the hook with you. You don’t want to cross the line with them.

This is the best place to start. What I always recommend is to start with a target group of about 150 to 200 people. It’s not as hard as it sounds. Here’s what I say, “Start with 2,000 people and whittle it down to 200.” The trick is to export all your contacts from your cell phone, emails, and social media accounts. Get them all in one place. Zip, sort, filter, whittle it down to 150 to 200 people, and then break the ice. Don’t do it as I did. Charge like a bull in a China shop saying, “It’s Dave. I got a deal. Do you got any cash?” It doesn’t go over that well. What you want to do instead is to break the ice.

This is something that we do for our clients that worked so well. We do a simple three-step email campaign. The first couple of steps are nice, warm, and fuzzies. “It’s Dave. Chances are, it has been a while since we connected. Here’s what I have been up to. Here’s what the family has been up to. Here’s the not-so-great stuff. Here’s what has been going on with COVID.” It’s a nice catch-up type of message. At the end of it, it’s important that you have a call to action. “That’s what I have been up to. How about you? How are you doing? Please hit reply to this email. Let’s connect. I would love to hear from you.” Send that out through a CRM or an email autoresponder to all 200 of your people. Your job is to have a little bit of back and forth with them when they reach back out to you.

A CRM for somebody who is not familiar with that is a database that’s managing contacts. We started off with Excel, but there are so many good options out there. We’ve used HubSpot now for a lot of years to track everything and upload things. Is there a favorite CRM that you like to use?

There are all sorts. To get started, you can go with an email autoresponder system, something like GetResponse. One quick tip, there are free versions and paid versions. You get to pay for. For the paid version, it’s $15 or $20 a month. That’s the first one. The third message in that sequence is what I call the Transition Message. We’re going to let people know that we’re going to switch gears, start talking about real estate, and do a better job of staying in touch with them, letting them know what we’re up to. Who knows? They may even want to partner up with us and sharing the profits and a deal sometimes. That’s an important message. We’ve got warm and fuzzy, and this transition message gives people a heads-up of what’s coming down the pipeline so that they’re aware of it and we’re not going to catch them by surprise.

I started off calling everybody on my phone that I was like, “I’ve had this conversation with this person.” I had been on my own portfolio for many years. You talk to people like, “Dave, you do real estate too.” I started reaching out and doing that. I wish I had this formula. Maybe it would have saved some time.

They saved you a little bit of time. Who knows? You’ve done very well. A lot of people don’t have the skillset or gumption to make those calls. There’s the living crap out of most people. The idea of picking up the phone, Dialing for Dollars, and cold calling is an intimidating task. What we’re trying to do here is try to shake the tree and get people to call you because you’re at that stage now where people are reaching out to you from time-to-time. Tell me what kind of a conversation is that versus you reaching out to somebody cold.

When you reach out to somebody cold, it’s a whole process. You’re shooting in the dark. You don’t know what that person is. They’re probably skeptical. Look what you said, I’ll never forget. I remember staring at my phone, not wanting to dial the phone. This is from somebody. “I was making sales calls door-to-door when I was twelve selling wrapping paper. I sold knives. I was cold calling people. There were referrals, but still calling people while I was selling knives in college and then I sold life insurance.” I also sold life insurance when I was with State Farm.

You were in the trenches and most people aren’t. Most people are petrified of doing anything like that.

My point is if you’re thinking, “I could never do that. I’m scared. It makes me nervous. I tried it,” believe me, it doesn’t matter how much experience you have. That nervousness never goes away because most people that you talk to probably are not going to invest or be interested, and that’s a lot of rejection to put up with. I like how your way is. It makes it a little easier, especially for people that might not be comfortable with that.

That’s why we start with 150 to 200 people. We already know not everybody is going to become an investor and that’s perfectly fine. In fact, out of that whole group, you might have 5 or 6 good prospective investors. Here’s the thing. Instead of you having to call each one of those people to figure out who it is, let’s shake the tree. Let’s get them to aim to rise to the top and come to us. It’s so much easier.

When somebody raises their hand or reaches back out, what’s the next step?

“I have to go old-crap. Now what?”

You make this initial contact, have your first deal, talk to people, and then twelve months go by before you do another deal with an investor. When I started, I didn’t have a show and an email list. I fell into that because I had people reaching out and asking questions. My marketing partner Caleb said, “We should start a podcast to help educate these investors.” Finally, I was like, “That’s a good idea.” Now, I understand that it’s also a good way to stay in touch with investors. How do you recommend that people stay in touch and top of mind?

The good news is you don’t have to start your podcast or TV show. However, I do highly recommend that you start doing some edutainment marketing.

Define that for us, edutainment.

We got to always step back and remember that we are the ones that are interested in real estate investing. Our target group probably isn’t. What they want to know is that we know our stuff. They don’t want to know everything that we know.

It’s like a doctor. I don’t need to know how a surgeon does my surgery.

They talk to you like a doctor. Your eyes gloss over. You don’t know the term because you feel dumb and confused. When it comes to our investors, the confused minds are going to say no. We want to keep it Reader’s Digest level. You’ll hear me say this over and over again. Reader’s Digest is a magazine written for grown-ups. However, it’s written at a thirteen-year-old reading and comprehension level. That means any average kid in grade eight read Reader’s Digest and understand everything in there.

It’s the same idea with our marketing. We want to keep it a little bit educational, not too much, don’t go too crazy, and ideally a little bit entertaining. What I talked about in marketing is constant, consistent communication. We want to be coming out on a regular basis. When we’re working with one-on-one clients, we make sure they’ve got something coming out once a week to their list. Let’s say the first week of the month is going to be an electronic newsletter. The second week of the month will be a blog post.

The third week of the month, maybe it’s a video blog. The fourth week, another blog post and then the next month, using a video log. Once a week, they’re getting something from you. Each thing has a call to action. The biggest mistake I see a lot of people are making in their marketing is they just put it out there and don’t tell people to do it. People say, “Dave, can you really get people reaching out to you, booking meetings, calling you up, and asking about your deals?” “Yes. Do you know how? You tell them to.”

I wish I had talked to you. I had to figure all this stuff out for myself over the years.

It might have saved you a little bit of time, but you got to dialed in now. That call to action at the end of your marketing, “If you would like to find out more, click here, book a call, let’s see if this is a good fit for you.” Eventually, some of them will and that’s how you start getting appointments popping up on your online calendar. All I have to do is look sharp on Zoom or in-person and show them what you got.

You started with the first step. I heard you mentioned the second step in there. We covered a lot of other stuff. Any of the five steps that we missed in this process that you have?

The first step is all about being seen as an authority and as your target group of prospective investors. The good news is you don’t need to be the next Robert Kiyosaki and sell eight gazillion copies of your book. You just need to be seen as the go-to real estate guy or gal with those 150 to 200 people. There are lots of ways to do that. Marketing and good-looking websites are going to go a long way. When you’re talking with people about investing, even if it’s over Zoom, dress up a little bit sharp, speak knowledgeably, and have sharp-looking materials. Don’t go cheap on the business cards.

Get interviewed on podcasts. If you don’t want to have your podcast, that’s okay. The next best thing or it could even be better, is to get interviewed on other people’s podcasts because that automatically positions you as an expert. Make sure you let your sphere or contact list know that you were interviewed on that podcast featured on your website and in your marketing as well.

This is a good time. I need to ask. Can I be interviewed on your podcast?

Absolutely.

I’m always reading different things. One of the books I read in 2020 and this is great for any business owner. It said, “If you want to have a great successful lifestyle business and what I mean by lifestyle business is a business that you can run and still be a parent, husband, wife, partner, be successful but be healthy, still have a family, and do things that you enjoy. All you need is 1,000 customers and you can have basically everything you want.” I was like, “Wow.” That doesn’t mean you have to have 1,000 people buying from you every single day, but I thought, “That’s not that big for a lot of businesses that are out there.”

Do you want to know the thing I love the best about the real estate business? We don’t need anywhere near 1,000. Most of your readers, I’m talking about investments, would probably have all the capital they need with ten. It depends on what you like. If you’re doing a $90 million deal, you’re going to need more than that but I’m talking about lifestyle-type investors that want to build up a portfolio, replace their job income, and have that financial freedom like Robert Kiyosaki where your passive income exceeds your expenses. If we’re talking about that kind of lifestyle business, you don’t need a ton of investors. If you had ten investors investing $50,000 to $100,000 each, that’s probably enough to get you there. You sure don’t need 1,000.

In the first deal we did, it was about $1 million that I raised and it was about ten investors. A lot of the investors and coaching clients I talked to and people that reach out say, “I’m trying to get this deal done.” The developer is looking for $700,000. I was like, “Try to get less than ten investors.” As I walked him through that, he was like, “I know enough people. I could get that $700,000 out of five people.” We restructured the deal for him and he looked at it in a little different way. I agree like most people that are doing decent-sized deals. This is a multimillion-dollar deal. Ten investors are terrific.

It’s a beautiful thing. Those people are going to reinvest with you and refer other people to you. You don’t need a ton of investors, especially to get started.

The nice thing is if you build that trust, if people see good results, and you stay in communication, then they’re probably going to refer other people that they know. What do you think about that?

You can be proactive about that and start that snowball effect. Get good video testimonials and warm introductions from your current investors to their sphere because they hang with other people that have money. You don’t need a ton. Once you got 1 or 2 investors on the go and things are going well, you can start snowballing things very quickly.

We say we put investors first at Next Level Income, education and opportunities that are out there. In the intro, I told that readers could find out how to get your program with a big discount. Do you mind sharing the best way for our readers to stay in touch with you and how they can find out more about that?

If people want to spend a day and take a deep dive into this, I do regular virtual workshops a couple of times a month. You can go to InvestorAttractionWorkshop.com. If you put in the discount code Next Level, then thanks to Mr. Chris Larsen, you will get a 50% discount on our already ridiculously inexpensive tickets because my model is I’m going to teach you everything in that full-day workshop and If you want to go out and do it by yourself, all the power to you. If you would like to hire the experts to do it for you, that’s what my business is. We have a boutique marketing agency. I teach you everything and then offer you an easy red button if you want us to set it all up for you.

Dave, before I let you go, I always ask my guests that come on the show, if you can go back to your 25-year-old-self living in Costa Rica, what advice would you give yourself back then?

Get into doing some deals sooner rather than later. That’s the advice I would have given myself.

Invest sooner, build a network, and invest in yourself. That’s phenomenal advice for anybody. Dave Dubeau, thank you so much for being on the show and sharing your story and all this advice with our readers.

It’s my pleasure, Chris. Thank you very much.

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Chris here again. I hope you found this episode valuable. I have one more thing to give to you. We have a page for my coaching clients where you can get a free copy of my book as well as much more from previous guests on the show. Check out NextLevelIncome.com/coaching to get a free copy of my book, audiobook, and much more. I’ll send you a copy of my book and cover all the shipping costs as a thank you for reading. Also, please like, share, and take 90 seconds to give us a rating on Apple Podcasts.

Important Links:

• Dave Dubeau

• Rich Dad Poor Dad

• HubSpot

• GetResponse

• InvestorAttractionWorkshop.com

• NextLevelIncome.com/coaching

• Apple Podcasts – The Next-Level Income Show

• https://DaveDubeau.com/davesonesheet

About Dave Dubeau

Be sure to get your free copy of my book and audiobook, “Next-Level Income” here.

– Chris

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Tagged: Raising Capital, Target Group Of Investors, 5 Step Money Partner Formula, Breaking The Ice, Attracting Investors, Simplifying Presentations, Group 3