Cash Flow Connections - Real Estate Podcast
From Farming to Funds - An Agricultural Professional's Journey into Commercial Real Estate Investing - E764 - TT
Tue Dec 05 2023Description
This episode covers various aspects of raising capital and building wealth through real estate, with a focus on the agricultural community. Topics include the fund of funds structure, transitioning to passive investing, success in raising capital, and connecting with agricultural professionals through LinkedIn.
Insights
Fund of funds structure simplifies capital raising
The easiest way to raise capital is through the fund of funds structure.
Real estate offers both opportunities and risks
Real estate has created many millionaires, but it can also lead to bankruptcies and heartaches.
Importance of diversification outside of agriculture
Farmers are generally not well diversified, often investing everything into the farm itself. Commercial real estate offers better tax benefits compared to land.
Transitioning from active to passive investing
The speaker started investing in real estate with a single family home and turned it into an Airbnb. They then transitioned to buying multifamily properties using seller financing and explored passive investing through real estate syndications.
Benefits of multifamily investing
Multifamily investing offers various benefits, including tax benefits, passive income, wealth building over time, appreciation potential, and diversification.
Authenticity and due diligence in raising capital
The speaker emphasizes the importance of being authentic and true to oneself when raising capital. They also spend time getting to know operators with deals and share their due diligence with others who may want to invest.
Overcoming imposter syndrome
The speaker initially had imposter syndrome when entering the commercial real estate industry but overcame it by sharing their story and realizing that others have similar experiences.
Connecting with agricultural professionals on LinkedIn
The guest on the podcast has found success in real estate by connecting with agricultural professionals on LinkedIn. They emphasize the importance of sharing one's story and engaging with the agricultural community on the platform.
Chapters
- Raising Capital through the Fund of Funds Structure
- Transitioning to Passive Investing through Real Estate Syndications
- Success in Raising Capital and Building Wealth through Real Estate
- Connecting with Agricultural Professionals through LinkedIn
Raising Capital through the Fund of Funds Structure
00:00 - 07:11
- The easiest way to raise capital is through the fund of funds structure.
- Real estate has created many millionaires, but it can also lead to bankruptcies and heartaches.
- It's difficult to determine which real estate strategies will consistently produce good returns.
- Mike Downey, founder of Farm Raised Capital, helps investors in the agricultural community invest in commercial properties.
- Mike grew up on a family farm and has worked with farmers and landowners for over 20 years.
- He got into real estate because he wanted to pass down his family farm as a legacy.
- The financial crisis in 2008 prompted Mike to self educate about commercial real estate.
- He read "Rich Dad Poor Dad" and realized that his house was not an income-producing asset.
- Mike started focusing on creating supplemental income sources and shifted his focus to commercial real estate.
- He started with a single-family home and turned it into an Airbnb-like rental property.
Transitioning to Passive Investing through Real Estate Syndications
06:42 - 13:48
- The speaker started investing in real estate with a single family home and turned it into an Airbnb.
- They then transitioned to buying multifamily properties using seller financing.
- As their real estate investments grew, they realized it was taking up more of their time and started exploring passive investing through real estate syndications.
- They discovered self-directed IRAs and began investing in syndications using their IRA funds.
- The speaker's personal portfolio is entirely invested in real estate, with no exposure to the stock market.
- They mention that the wealthy tend to have a higher percentage of real estate in their portfolios compared to public equities.
- The speaker started raising capital for deals after speaking to a group of farmers about passive income and diversification outside of agriculture. This became an opportunity to market deals and raise capital from farmers.
- Farmers are generally not well diversified, often investing everything into the farm itself.
- Commercial real estate offers better tax benefits compared to land, which is not depreciable.
- The speaker created Farm Race Capital and hosts monthly meetups providing information on topics like self-directed IRAs.
Success in Raising Capital and Building Wealth through Real Estate
13:26 - 19:55
- The speaker recently launched a new opportunity and had a webinar, and they are interested to see how the follow-up conversations go with those who expressed interest.
- The speaker has had success in raising capital and offers advice for others looking to do the same. They emphasize the importance of being authentic and true to oneself.
- The speaker spends time getting to know operators with deals and shares their due diligence with others who may want to invest. This approach allows for better economies of scale.
- Multifamily investing offers various benefits, including tax benefits, passive income, wealth building over time, appreciation potential, and diversification.
- The speaker initially had imposter syndrome when entering the commercial real estate industry but overcame it by sharing their story and realizing that others have similar experiences.
- Sharing one's story can resonate with others and help them get started in their own journey.
- The speaker is active on LinkedIn, regularly posting content on the platform.
Connecting with Agricultural Professionals through LinkedIn
19:27 - 25:33
- The guest on the podcast has found success in real estate and emphasizes the importance of sharing one's story to connect with others.
- The guest is active on LinkedIn and posts content regularly, focusing on topics like succession planning and alternative real estate investments.
- The guest initially had a dormant LinkedIn account but decided to revive it this year and has organically built a following within the agricultural community.
- LinkedIn is a preferred platform for connecting with agricultural professionals, as opposed to Instagram or other platforms.
- The guest does not have a social media team and generates post ideas based on daily interactions and conversations with families he meets with.
- The guest discovered the presence of many agricultural professionals on LinkedIn through targeted searches and joining groups related to real estate.
- Farm Race Capital's website is the best way to follow the guest and connect with him.