Dig Your Well Before You’re Thirsty: Raising Capital the Right Way!
In real estate, many new investors fall prey to the same myths:
- “One great deal will give you financial freedom.”
- “Underwriting is easy—just plug it into my analyzer.”
- “Multifamily is low risk—prices can’t fall because of the housing shortage.”
But perhaps the most damaging myth of all is this: “If you find a great deal, the money will find you.” It’s a comforting phrase. It’s also the reason many syndicators get blindsided, lose money, and damage their credibility.
The Problem with Syndication as “One Deal at a Time”
In a typical syndication, investors find a property, tie it up with a deposit, and then scramble to raise capital before closing. This creates a built-in disadvantage:
Negotiating from weakness: Sellers want proof of funds. Promising that money will come later weakens your credibility.
Investor skepticism: When investors only hear about the deal after you’ve tied it up, it feels rushed. They’re evaluating you as much as the property.
The commodity trap: Leading with the deal puts you in the same bucket as every other syndicator pitching “15% IRR projections.” At that point, the only differentiator becomes pricing or promises—both risky roads.
This is why so many syndicators end up stressed, losing deposits, or worse—losing credibility with their investors.0
The Fund Model: Flipping the Script
What resonated with us is how the fund structure changes the entire frame. Instead of chasing capital after the deal, you raise first, then go shopping. The shift might sound simple, but it’s transformative.
See how one of our industry allies, Marcin Drozdz, broke it down into the Three Ps—a framework we deeply agree with:
People – Investors don’t just back a property; they back the team. Experience, trust, track record, and execution matter far more than flashy rent comps.
Process – A repeatable investment thesis and system inspire confidence. Investors want consistency, like McDonald’s—wherever you go, you know what you’ll get.
Portfolio – In syndication, the property is the pitch. In a fund, the property becomes proof that your people and process work.
This flips the focus from “selling a deal” to “building a brand investors trust.”
Why the ‘$ Will Follow’ Myth is So Dangerous:
When you tie up a deal before raising capital, you’re in a race against the clock:
Sellers want proof of funds. Without committed capital—dry powder in the bank—you’re negotiating from weakness.
Investors are caught off guard. They’re hearing about you and the deal for the first time, which makes everything feel rushed.
You’re left scrambling. Legal work, due diligence, webinars, calls, and wire deadlines all collide, and even a small hiccup can kill the deal.
This is why so many syndicators lose deposits, miss opportunities, and burn relationships.
Hard-Learned Lessons:
Even experienced operators in the commercial real estate industry (CRE) witness painful stories that drive this point home.
Newcomers often believe the “the money will come” mantra, leaning on the advice of some syndication ‘guru’, only to be left with a fantastic deal under contract—and no capital to close.
Even worse, such operators may end up spending months chasing new investors, reaching out to family offices, and even letting earnest money go hard just to buy more time. But most often new money doesn’t show up. The deal dies, along with tens of thousands of dollars in deposit, a tarnished reputation with brokers, and a bruised confidence.
The realization? You must dig your well before you’re thirsty!
Deals will only attract capital if you’ve already built the relationships, the investor list, and the trust before you need it.
The ASPC Perspective
At ASPC, the ‘Fund’ perspective aligns with how we’ve always approached real estate. We see investing as more than a transaction—it’s about building long-term trust with partners, negotiating from strength, and being prepared when opportunities strike.
That means:
Capital readiness. We secure commitments before deals so we can negotiate from strength and move decisively. Sellers respect buyers who are capital-ready.
Long-term trust. Investors aren’t treated like ATMs—they’re partners in a repeatable, professional process. They prefer managers who treat them as partners, not ATMs.
Positioning for scale. By building an investor base and a system first, we’re not scrambling deal to deal. We’re running a true investment business. This requires systems, not scrambling.
Final Thoughts
If you’re content with one deal every couple of years, syndication may suffice. But if the vision is sustainable growth, multiple deals annually, and serious capital behind you, then the fund model deserves your attention.
Being a syndicator is a role—but being a fund manager is a business.
At ASPC, we’re committed to building that business—one rooted in trust, process, and the kind of investor relationships that endure.
Real estate isn’t about “getting lucky with one deal.” It’s about building systems, trust, and alignment that scale across many.
So, if there’s one principle we keep in mind at ASPC, it’s this: Dig your well before you’re thirsty!
Want to hear similar perspectives? Some of our industry allies, such as Marcin Drozdz, Jonathan Twombly, share the same wisdom in their work with operators and investors.
