Raising Private Money: Strategies from Ray Hightower's $3 Million Success

Raising Private Money with Jay Conner

In a recent episode of the "Raising Private Money" podcast, Jay Conner explores the fascinating world of real estate investments with special guest Ray Hightower. The episode sheds light on Ray's journey of raising over $3,000,000 in private money for commercial real estate deals. This blog post will delve into the takeaway points from their discussion, focusing on Ray’s transition from the tech industry to real estate, his preferred asset class, and his effective methods for attracting private investors.

From Technology to Real Estate

Ray Hightower's entry into real estate is both motivating and informative. His career began in the dynamic field of technology, where he held a degree in computer science and gained extensive experience working for Fortune 500 companies. He eventually founded and managed his technology company for over two decades. Upon achieving significant success, he sold his tech company and transitioned into multifamily real estate.

This career switch was driven by the potential for equity building and the unique advantages offered by real estate investments, including capital preservation, intrinsic land value, insurance protection, and steady cash flow from rent payments.

Why Multifamily Properties?

When asked about his choice of asset class, Ray prefers multifamily properties, particularly those in the 50 to 150-unit range. He appreciates various asset classes including single-family and retail spaces, although office properties pose challenges due to the shift towards remote work. Multifamily properties, however, are a more stable investment because people always need housing.

Focusing on properties with 50 to 150 units allows Ray to ensure professional management without facing direct competition from large private equity firms. This approach enables effective property management while pursuing valuable deals that larger entities might overlook.

Structuring Deals with Private Money

A critical part of the episode highlights how Ray structures his deals using private money. His approach involves limited partners (LPs) and general partners (GPs) within limited liability corporations (LLCs). Ray employs a 70%-30% ownership split between LPs and GPs.

Private investors are primarily looking for excellent stewardship of their investments, and Ray’s meticulous oversight ensures their money is managed carefully. He compares the investor's journey to a scouting trip, emphasizing how crucial it is to ensure safety and improvement in property investments.

Attracting Private Money: Trust and Methodology

The discussion then moves to how important trust is in attracting private money. Jay highlights that private lenders often invest in the operator rather than the deal itself. Ray builds on this idea by outlining a four-step method he learned from his mentor, Hunter Thompson: attract, educate, nurture, and close.

**1. Attract:** Initial attention is garnered toward investment opportunities through effective networking, an online presence, and valuable content distribution.

**2. Educate:** Comprehensive information about the investment process and potential returns is provided to build credibility. Education enhances not only the learner's knowledge but also boosts the educator’s standing.

**3. Nurture:** Developing strong relationships is essential. Continually adding value through education, connections, events, and podcasts builds trust, showing potential investors that their interests and finances are genuinely taken care of.

**4. Close:** If the steps of attraction, education, and nurturing are executed with a giving spirit, the final investment commitment often follows naturally, without direct solicitation.

The Power of Mindset in Building Partnerships

Towards the end of the episode, the conversation shifts to the importance of mindset in busines