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How to Set Up a Crowdfunding Platform

irei summit market research Jun 01, 2021

The idea of crowdfunding and the actual word around crowdfunding has become such a common word. People take it to an extreme, and there are a lot of platforms out there taking advantage of people.

This video will teach you the difference between two things: The crowdfunding platform in which you've invested in a company and the people—and a platform in which you are investing in the collateral itself.

There is a HUGE difference.

What is Crowdfunding?

"Crowdfunding starts with an idea. So the idea is formed, from what somebody has an apartment complex they're needing to fund. Somebody has a record label they're looking to fund. That was the purpose behind was a means to an end for you to raise money, based on an idea. That's where it all started.

The middleman, the person in the middle is typically the broker or the person who's putting together the idea with the funding.

So who is the middleman?

We all can have great ideas. And a lot of people out there have money. But who's actually going to put that together? And how's it going to work?

That's why you're here, you need to figure out how am I going to get these two people to connect so that I can raise what I need. It's either going to come from you, yourself, your idea, or a company."

Carrie Cook:

Carrie Cook currently holds two executive-level roles consecutively as President of Ignite Funding and CEO of Preferred Trust Company. She has more than 13 years of experience specializing in private lending and is a licensed Mortgage Broker with the Nevada Mortgage Lending Division and Arizona Department of Financial Institutions.

With over $500 mill funded since leading Ignite Funding and returning 100% of investor capital in default scenarios, Carrie is committed to continuing the growth of Ignite Funding and the preservation of investor capital. She is determined to lead the most transparent private real estate investment firm in the United States...

How to Set Up a Crowdfunding Platform

It's my pleasure to introduce our first breakout speaker Carrie Cook from Ignite Funding, based out of Las Vegas. The Fourplex Investment Group actually uses their company for acquisition and development money. And Carrie emerged from the ashes of the crash back in 08' and has been able to put together great fundraising platforms coming out of an economy like that.

If you've ever run into a deal that you want to fund but you're tapped out on your conventional loans, or you need to raise a lot more than you ever could through conventional... and you're starting to think big about how can I put together an apartment deal or syndication or something, she's going to be a fantastic resource.

Recently, this new crowdfunding thing has come out that's making it easier to raise money from the general public. When you wanted to raise money and not go to jail from SEC prosecution in the past, you had to do mountains of paperwork and lots of terrible things.

The clouds are parting a little bit on that. And Carrie is going to get into how you can raise money through crowdfunding.

- Steve Olson, FIG

I'm gonna start with a kind of funny story. My management staff, I love to challenge them. I'm always making changes, I'm always advancing the company in different ways that they all think impossible. So we were sitting around a management meeting, and they said, you know, be great, Carrie if we could do a management retreat. That really, we do management retreats here. I just hadn't done that before.

You know, we work we live, eat and breathe real estate. We work for our investors. But I told them, I would come back in a week, and I would let them know what we were going to do. And what we were going to do was a Spartan, you guys did a Spartan? It was a lot of fun, right? My management staff is not all young. My management staff was very challenged by it.

A couple of weeks prior to the event, they tried to get out of it. And I said, Absolutely not. Listen, I'm going to buy you dinner the night before, I'm going to put you up in a nice hotel. And the next day, we're going to run this 8.3-mile obstacle, if you will, it was 24 obstacles. It took us about three hours. But we did it as a group, we stayed together and we accomplish that goal.

So when you think something is impossible, it isn't. I will tell you, I am kind of the token Female Speaker today as well. And I laughed when they when Steve called and said, Hey Carrie, would you mind talking about creating a crowdfunding platform? And I said I'll talk about it. I'll talk about crowdfunding platforms and why we were successful and the obstacles that we faced and how we raise money. But I want to make sure you understand that crowdfunding and the actual buzzword around crowdfunding bother me a lot. It bothers me a lot because it has become such a common word. And I think people take crowdfunding to an extreme.

I think there is a lot of crowdfunding platforms out there right now that are taking advantage of some people. And I want to make sure that at the end of this if there's nothing else you learned from this, the difference between a crowdfunding platform in which you're investing in a company and the people and a crowdfunding platform in which you're investing in the collateral itself? Because there is a huge difference. So a little bit of this as an underlying buyer beware because I am not a huge, huge supporter of a crowdfunding platform and where you invest in the company and the people. But with collateralized real estate, are you still investing in the company and the people? You are? You are?

That's part of your due diligence process. It's not what you're investing in. So I want to make sure that I'm very, very clear. So if anybody is like, Oh, you know, I want to learn what's going on in the West in real estate and you want to go next door, know that I'm going to teach you what we do, why we've been successful. I will tell you that we're one of 40,000 companies in the state of Nevada that actually made it through the recession. We are mortgage brokers. by trade, they still call us commercial broker or hard money lender. out of it, the JOBS Act. Came crowdfunding right. But what is it? What is crowdfunding? What does it mean?

Crowdfunding starts with an idea. So the idea is formed from what somebody has an apartment complex or needs to fund. Somebody has a record label they're looking to fund that was the purpose behind crowdfunding, it was a means to an end for you to raise money, based on an idea. That's where it all started. The middleman, the person in the middle is typically the broker or the person who is putting together the idea with the funding.

So who is the middleman? Who is it? Is it you? Is it a company that's putting together that middle piece of the puzzle? Because we all can have great ideas? And a lot of people out there have money? But who's actually going to put that together? And how is it going to work? That's why you're here, you need to figure out how am I going to get these two people to connect so that I can raise what I need. It's either going to come from you, yourself, your idea, or a company.

My company raises funds from individuals to fund acquisition development and construction loans for commercial and residential home builders and developers in seven different states. That's our idea. That's our concept. So what are we looking for? We're looking for individuals that are looking for passive income. We bring the idea the borrowers need, with the individuals who are looking to finance it. That's what we do. So that idea is out there. So I'm sure you guys have ideas of what you're looking to fund, what you're looking to do. That's the concept behind the idea.

Where do those things come from? Everybody asks me, Carrie, how do you raise capital? How do you guys raise capital? Does anybody in here raise capital? How do you raise it? Personal network? How do you raise a personal network? Do you go to a bank? Yeah, networking, this list up here? Are all the things that I do? All of them all the time, every single day? One thing is not going to work? So do I invest in real estate? Yes. Do my friends and family invest in real estate? Yes, do I recommend friends and family investing in your product? You ever sat around the Thanksgiving table? When a borrower defaults on a loan? It's a lot of fun. It's challenging, right? Friends and family are usually the first ones we go to raise capital.

I would recommend that be your last. Prove yourself first. Prove what you are trying to raise money for? is a proven product with proven results. Friends and family should be the last ones on your list. Why? Because look at this list. I can go to companies, right? We have tons of companies that invest with us. Why? Why do they invest with us? Can't find projects someplace else. Right? You never know if you pick up the phone and mortgage rate might decide or apartment rate might decide that they want to take on your project. Pick up the phone. Don't be scared of that. I do. If I get myself in a situation where I'm a million dollars short.

I reach out to a few companies. I gotta get that million dollars somewhere, right? Internet crowdfunding we have this beautiful thing called the internet. What are people looking for? easy and quick ways to invest where they don't have to talk to anybody. We've lost the ability to communicate person to person. It's not over. But it's like it's almost becoming a bit of a dinosaur. Right? We spend all of our time on the phone right here on the phone. We spent all of our I'm sorry, but it's true, right?

But I'm not faulting, you get back on the phone if there's a deal to be made make the deal. But we spend all of our time forgetting about the fact that we are people we can communicate with. So why is crowdfunding so darn successful first year $16 billion? That jobs that came out we went gangbusters. Why was it so successful? Does anybody know why it was so successful? Why?

Well, job Jacks enabled you to reach all sorts of investors legally through average lightning source your marketing at scale? That's right. It opened the access beyond what we were able to access before. What type of investors are those? Have they accredited investors? How many of you guys have gotten on a crowdfunding platform? anybody tried it? What's the first question they ask you? Are you accredited?

So let's think about this for just a second. How many does anybody? Does everyone know what the definition of an accredited investor is? So million dollar net worth excluding your home? So you have a decent amount of money? How many millionaires Do you know? Pull down an investment at 1000 bucks?

How many do you know? They don't. Okay? crowdfunding platforms allow you to invest a very small amount of money. And for you to check a box that says I'm accredited. Most of them don't even require third-party verification. That is freakin scary. I am sorry. But think about that for just a second. Do you think at some point, the SEC is going to tighten those requirements?

Yeah, when's it gonna happen, folks, when the market softens, and all those crowdfunded starts to take back these assets. And they've never done it before. Because they're brand new to the market. They are phenomenal internet marketers phenomenal. They can raise millions of dollars every single day with $1,000 credit accredited investors. I can't wait to see what happens. I know that I will still be standing because it's only one of the things that I am doing, as I work through the process of bringing on capital, with my investors. But it's phenomenal, who you can reach. But there are other ways to do that. Social Media Marketing.

Have any of you ever tried social media marketing to bring clients in to have communication with them? It is so easy. To me leads I bring in every single day from social media marketing. I spend $60,000 a year on social media marketing. How many leads Do you think I get from that? You guys ever tried to like Google or Facebook? Any any? You know, at $60,000? It's like $5,000. A Mommy, it's really, it's really kind of a drop in the bucket.

Depends on it does depend on your ads. And you have to get it you have to get clever, right? You have to get clever with it. About 5000 leads. But when they click the button, it's a little different than $1,000. investor, their $100,000 investors. Why are they $100,000? investors? Because I'm marketing directly to them. And they're asking me to call them. They're asking me to pick up the phone and call them. Try it. Social Media Marketing is the cheapest and easiest way to get qualified investors. Yes.

Social Media Marketing through social media platforms like Facebook. Yes. Google AdWords. Yep. Are you doing both of those? We're doing a little bit of both but primarily coming from Facebook, primarily from Facebook. But you can't do AdWords as well. It doesn't bring as high a quality of investor in my opinion. But it definitely does work drives them to our website drives them to you know what we're what we want them to look at. Yes.

Instagram, not so much. Yeah, Facebook is is is a better facet. For us. Events and trade shows. I'm obviously here. I like face to face. I like talking to people. I think as far as quality of investors and understanding our business and what we actually do is very, very difficult sometimes to do over the phone, face to face, and going to events and trade shows.

You're here to learn. And we're here to provide information so never stopped going to those never stop educating yourself. I learned something every single time I'm at a trade show. Networking. Remember what Steve said Don't be weird. Talk to everybody. Hold your hand out find out what they're doing.

What It's silly not too many of us paid to be here, right? get something out of it. And then write a book. This is hysterical. My marketing department has been on my butt for years to write a book, create this persona. You guys know everybody that writes a book, I guess that makes them successful. I'm still trying to wrap my mind around that, that idea of creating a persona. I know I've done a lot in my career. But for me, it's just it's a, it's what I do every day. But if you have something to teach somebody, write a book.

For whatever reason, people will invest in you. If they feel like you are an accomplished writer, I don't know why I can't explain it. I think it's, it's kind of like the cheese. But it does work. It absolutely works when you're raising money, to let people know what your successes were, but most importantly, where you failed. What did you learn from your experiences, that's what makes people believe in you and want to invest in your product that creates that platform for you then to go out and raise money.

All of these things I deploy every single day, there is no one size fits all, when it comes to marketing, when it comes to gathering capital, for people to invest. So crowdfunding platform, if you just want to use the internet, that's, that's okay. I'm sure you will find investors. But if you deploy all of these things, your pool of investors will be so diverse. So diverse.

So who is that person in the middle? What is their job? What is your job? If you're the one that is putting the project on the table and bringing the funds together? What are your job and all of this? communication is definitely key, proven product first? What are you selling? Have you been successful? Does it work? Does it meet the viability research? Is it gonna sustain the time that that person is invested with you?

Is it don't put something out there. That's crap. You're gonna be around for a very short period of time. put something out there that you know can sustain. Do your research. Make sure you do your research. When we underwrite projects, my investors are depending upon me to know everything about that project, everything, the location, the market drivers, the equity that's still left in the project, the borrower, their success, what they do good, what they do bad. If you have to take back the property, who are you going to sell it to? All of those things you need to be able to answer before you can put a product out there on any platform to sell.

I don't care what your idea is. Stand behind it. 100%, stand behind it, know it inside and out. Then you gotta gather these funds, right? gathering funds can be very, very difficult. For cat lovers in the room, I will apologize. But it's like herding cats that list before imagine going out and trying to get all those funds put together.

For a closing date, hard date, the borrower is gonna lose a million dollars, you don't close on that date. You got to get all those funds together. Now a crowdfunding online platform makes it a little easier, right? Because you can see that tick of $1,000 every single time every single time you know where you're at, you know where your shortfall is. But how do you cover the shortfall and as an online platform, that's all you have to stand by? Is that an online platform where you're going to go who you can call? I mean, this isn't Ghostbusters, right? You have a shortfall of half a million dollars, and you need to fund it tomorrow.

That's no laughing matter. So crowdfunding platforms cannot just exist online. You either have to have a company or other people that can support the close of that project. And that's why I think it's so important that you have all those other aspects lined up and ready to go if you have to make that phone call. manage the expectations. You talked about communication. Expectations are tough to manage when you have 1000s and 1000s of investors. Because everybody has different expectations of how that project should be completed when it should be completed, how much money they should make, whether it was completed on time.

Communicating with your investors is something that is sorely missing from crowdfunding platforms. I spend a lot of my time traveling around to all of the properties that we have funded. Why do I do that? Because I'm trying to manage the expectations of all these individuals. So when the phone rings, and they ask me about a project in Podunk, wherever I have the answer to their question, either I have pictures, I have videos, or I can support and communicate with them exactly what's going on with that project, manage the expectations of your investors.

When people invest money in you or your product, they have very high expectations of you. It's not hard to manage them, it really is not that hard. You have to do a little extra work, you have to travel a little bit more. But please manage those expectations and then stand behind your product.

Let's just admit it. Life's not perfect, right? We just saw Mike Tyson punch Steve in the face. It happens. borrowers don't make payments. That's the risk, right? That's the risk in real estate. That's in my world. And when they don't make the payments, not nice carry comes out. Because I need to understand why they're not making their payments. What do we need to do to get back on track? My investors depend on me to take back that property if they if need be, right? They invested in me. They invested in this crowdfunding platform with the understanding that they would get their capital back plus a return. And when people invest in crowdfunding platforms, that's what they expect.

Have you guys ever read the financials of some of the largest crowdfunding platforms in this country? ish should their public companies, they're losing 30% of their investor's capital? Each quarter? You just heard me correctly, they are losing 30% of their investor's capital each quarter. Is this possible? read their financials, their public companies. It's how I learned a little bit about the crowdfunding world, and what it takes for them to run a platform. Some of these companies also have 10s of 1000s of employees, Gemini employees, I have 1212, I don't run platforms as large as theirs. But here's one thing I can tell you. I've raised over a billion dollars, I haven't lost one penny, because I manage the expectations by investors know exactly what they're investing in. And when the market softens, or a borrower doesn't make a payment, they know I'm going to go after that collateral. And if I've done a very good job of underwriting that collateral, then they shouldn't lose money. Right.

Now, there are some things I can't control. I can't control how deeply the market turns. And I can't control how long it takes for it to come back. But what I can do is I can prepare for that by holding back enough of the company's funds to carry the cost of those properties while we're working through that situation. So managing that expectation, communicating with those individuals, and standing behind your product is very important. crowdfunding platforms do not typically have an A to Z aspect about them. What I mean by that is they don't do their own on their own underwriting.

fundraising, they don't service their loans and collect on them. So if you're looking for a solid crowdfunding platform to create for yourself, or to get involved with, make sure that they do all of those things for you. Because a lot of them will outsource as soon as there's a problem. It's like, let me just wipe my hands clean of that one.

No, no, no. We don't get to wipe our hands clean of anything. If you provided a product to somebody, and they put their hard-earned money into it. That's your job. As far as I'm concerned, that's your job. You don't get to pass that on to somebody else. And finally, you have to love what you do if you're going to get into a crowdfunding platform. You really, really, really have to love what you do. Because this is a lot of work. This is not easy. What are the two business models or crowdfunding platforms?

We talked about them a little bit security, and there's a nonsecurity crowdfunding platform. Security is more along the lines of the JOBS Act, it allowed access for individuals who wouldn't have typically had an opportunity to invest. Although accredited investors I'm still a little confused by how we could have millions and millions and trillions of accredited investors out there. But suppose we do because people are investing in it. And then nonsecurity what carry there's a nonsecurity platform. The difference one is a collateralized real estate investment and one is not. It won't surprise you that I run one that's not ours is not a security.

We work in states that allow commercial lending with multi beneficiaries, those states exist, but there are a few of them. Most of them are in the western United States. Those are the states that we lend in. We do that for a very specific reason, we want individuals to be able to invest in the collateral itself. So if ignite funding was to go away, you are still the first lien holder on that property. So think about that for just a second. If you're in a crowdfunding platform, that is a security, your security is based on the ability of that company.

Not the product to be successful. I'd rather put my security in real estate. Because at least I have something collateralizing my investment, those are the two distinct differences between the two. Now, there are only a few states you can do this in. So crowdfunding platforms in general, if you have a security, it's all 50 states. If it's nonsecurity, it's very limited to about 10.

I'm in seven because the other states are just too far away for me to get to in a day, I need to be able to walk the property that we're living on. So there are two different types. Now, again, it depends on what you're trying to do. If you're trying to fund a project, one project and we can take Utah as an example, in Utah, multi beneficiaries are allowed. So in the state of Utah, if you wanted to set up a crowdfunding platform, and have multi beneficiaries on one loan, you can certainly do that.

You have to identify the people. I don't care whether you're going to do secure security or a nonsecurity as far as a platform, you need to know who the people are behind it. Especially on the security side, you really need to know who the people are, what their successes are, where they came from, what they've done before, if they were successful, and do your due diligence. We throw around the word transparency, too much. because too many of us aren't. Let's be honest, we're not.

My background is in marketing. That's where I started. My job was to spin the story, right? We can't spin a story when you lose people's money. There's no spinning that story. So be transparent. I'm not always going to hit home runs. But I'm going to do the best darn job I can possibly do by my investors. So you can look up anything about Carrie, you can look up anything about the people behind our company. And you can look up anything about our product results. And if you can't put that out there, and you don't feel good about putting that out there, then don't get in the game of crowdfunding, period.

Don't do it. But if you go to our website, you're going to see every single loan that's ever been funded, what the return was, to every single investor, what properties we've taken back how long it took to take back those properties. And what the results were. We don't always win. It's just reality. We don't always win in real estate. If you're going to set up a crowdfunding platform, you have to be prepared to be transparent. Why do people invest online? Because they can do quick research, right? You can't hide from things online. If you do something wrong. I guarantee you if I lose an investor's money, what's the first thing they're gonna do? They're going online, they're going on the attack.

Here's what she did. Here's what happened with this company. read the reviews. That's what they're gonna do. And then what happens to your crowdfunding platform? It's done. You're done. All it takes is a couple of bad reviews. And guess what happens? Your crowdfunding platform is over. But if you're transparent, and you talk about it, and you manage those expectations, and you let people know you're not perfect. They tend to ride along with you a little bit easier.

They tend to be less. How do I say this? their reviews online are you know what, I had a default, but they worked through it and I got my money back. That's a much different review, then. Don't use this company. They lost my money. You read one of those. Are you going to invest in that company? No, you're moving on to the next one. So please manage those expectations. answer those reviews so people don't be scared of them. Answer the reviews. Sometimes people are just trying to be vicious. Sometimes there are companies out there that are just trying to beat you down. Make sure you answer those reviews. When you pick a project, I learned a very valuable lesson in 2008. I had $500 million invested in Las Vegas. Need I say more? took 10 years 10 years to get our investors out of those projects.

That's how long it took the value of that real estate to come back up. Guess what I learned? Who I wish I learned to gamble before I did that. Um, diversification. Not only is it important for me to diversify my portfolio, but it's also important for me to diversify my investor's portfolio. So our portfolio is diverse. We are more nimble. Now. shorter-term loans, move with the market. Find the right markets. No market was recession-proof, but some of them were darn close. And those are the areas that we were in.

And this is a pretty good market. Where you guys sit Today was a very nice market to us. I think it will continue to be a very nice market for us. There are other markets that saw different decreases, not Las Vegas, I mean, I saw a 90% decrease, I couldn't, I couldn't give somebody land. And I'm not kidding you. I couldn't meet them take it. That was the situation that we were in. So it made me take a step back, it made me think about how we would rebuild this company if we could survive. And when we did survive, there's a huge emphasis on where you invest what you invest in. It's not just about where it's about what watching those markets, you have to become an analyst period. There are no two ways around it. You've got to do your research, you have to figure out what's going on in each of these markets.

What's driving them? What's going on with job growth? Where are they at with their medium home prices? Is it getting too high? Should you get out of you to know, residential? Should you be in the commercial when's the right time?

What's missing in specific markets go after it. Figure out what those things are. So if you don't know what drives that market, you should be investing there. So watch what watch what's going on some of these crowdfunding platforms, it's like, Hey, we have an opportunity. Here it is. They don't have a product. They're constantly looking for products, do your research on the product. The process is in the details. A lot of people ask me, Carrie, how do you manage all this? This is a lot. marketing, sales, underwriting servicing, you know, preparing for the unexpected communicating, and then you just do it all over again over and over and over again.

Yeah, you're right. I do it over and over and over again. I eat breathe, sleep. It's awful. I don't sleep much. But I'll give you a quick story. Here I am sitting in Salt Lake City. I don't know if any of you know who Taylor built Holmes's. I have $19 million that just wanted to default with them that I took back at a trustee sale. Here on your county court steps took all the properties back. You have to be resilient, you have to go after it, you have to get those properties. You still have to work with those borrowers. So they don't file bankruptcy on you and wrap you up for three years. There are so many things that go into this. It's not just setting up a platform and raising money and going out and thinking that your product is the end all be all. It's a lot more than that. This face is stress.

This is not easy. I don't want anybody to think for one minute that this is easy. It takes a lot of work and a lot of dedication. And now that I have all those properties back, guess what I get to do? I got to dispose of these properties. I'm not going to leave my investors hanging. What are they expecting of me? results? You took my money. The borrower defaulted. You took it back, you better not lose my money. This is what people think. Yeah, there are crowdfunding platforms out there that are losing investors capital quarter after quarter and they continue to invest with them. They don't even know they've lost their money yet. It's coming. But they don't even know they lost their money yet. Because I'm so transparent.

My investors know where we stand right now. They know what's going on with their project properties. They know we have half-completed homes with Taylor built. They know we have lots that are underwater. They know exactly what's going on with these properties. Because that's what You have to do. So yes, we wake up and we marketing constantly, we're constantly looking for capital. We're constantly educating people about what we do. And the differences between the two crowdfunding platforms constantly doing that. sales, sales is easy, easy, all I have to do is educate people. It sells itself, the product sells itself, we offer double-digit returns, everybody's looking for a high level of return. By doing no work, they don't wanna do any of the work. And that's okay.

That's why I'm here. That's my team's here. That's what we do. So that in-between person between the idea with the borrower who needs the money, and the funds in between is all these details, all the processes that go into running a crowdfunding platform? It's a lot of work. But, anybody in here can do it, right? We just watched a man 5050 and 50, that anybody today that says I can't do something, we're gonna take you out to the back north 40. So why do I do this? Everybody does something for a reason.

And somebody asked me a few years ago, and it took me a while to answer this question. And I thought, why, why is this taking me so long? To answer the question of why I do this, we all like to make money. But I'm a results-driven person, I settle for nothing, nothing. And when I really took the time to do an analysis of the jobs that were created, by the funding that we do, by the communities that were built by the funding that we do it, it kind of moved me.

I couldn't believe what we were accomplishing. By funding these projects. It really, it got my attention in a way that had never got my attention before. Because I'm constantly moving that I never took the time to really realize the impact that you're making on somebody's life. There are home builders that have been gobbled up by public home builders. Because we lent them money.

We gave them their first start. There are their 1000s, hundreds of 1000s of people that have built homes because we've lent money in these communities. It is so cool when you really think about what you can accomplish with these platforms. And with very few people, we have about 3000 investors. And those 3000 investors, what they have put to work in these communities and what they've built is unbelievable. So when you think that all you're doing is a job, and you're always trying to do the best for people, you really stop thinking about all the things that you've created and done. So platforms like this, change people's lives, they truly change people's lives. I have investors that utilize these types of platforms for passive income. So everybody has a portfolio? Yes.

And we all try to create certain pies for certain things and take on certain risks at certain times in our lives. I promise you I have strengthened every single one of my investors, portfolios, whether that be in retirement as they're preparing for retirement, whatever it happens to be in a way that allows them to do other things in their life. I'm filling that real estate portion for them. If you want to know more about how to create a crowdfunding platform system is probably the biggest question that I get Carrie, how do you manage all of this, you can go out and you can buy a system.

Or you can create one. And I am a crazy one that decided to create one because let me tell you what, only you know your model. You can try to fit a square peg in a round hole. And eventually, you'll get there because it'll chisel away and it'll keep going and eventually it will become a circle it will get into that round hole. Or you can build one.

It has cost me the same amount of money to build a system as it would have if I was paying for one every single year. So depending upon what you're looking to do and how you're looking to size up in your crowdfunding platform, systems are probably the most important aspect of this because you have to manage all of this.

So if you want to talk specifics, I don't want to tell companies at this particular time, if you guys want to talk specifics about how to set up a crowdfunding platform, maybe start small and move bigger, I am here to tell you, I will give you 30 minutes of my personal time. So for everybody in this room, if you want 30 minutes of my time to figure out how I did this, how we actually started this crazy roller coaster that we're on, you know, give me a holler, I will walk through it with you marketing strategies, I'll walk through it with you what gets people's attention online.

I know a few tricks that get people's attention online, and I'm willing to share them with you, there's plenty of us to go around plenty of projects to go around. If there's anything that I can possibly do to help in that regard, please let me know. There's also plenty of investors to go around. So the Fourplex Investment Group, I am doing their acquisition. They are a phenomenal company. And ironically, working with them, I found out very quickly that our business models are very, very similar to the point where I found myself becoming a builder, because of Taylorville. Thank you.

That was helpful. Now I will be building and constructing homes. But you know what, that's what I need to do to get my investor's money back. If I have to build houses, I'll build houses. We have enough relationships, we will get through it. If you guys have questions, please, they are that that 30 minutes, I'm all yours, you can ask anything you want. Even as it pertains to the JOBS Act, I mean, I have, there's very little that I haven't done as far as the securities world. So if you have questions about that as well, setting up, if you guys are setting up reg DS arrays or whatever you're setting up, I have done all of that as well. Some of it has proved to be successful. Some of it was not.

I've also been in the real world. So I used to assist in running a read. So I'm very familiar with the security side. And I know that I don't love the security side. I think those funds sometimes get a little over leveraged hate that word. But they get a little over-leveraged, and they get a little in front of themselves. And then when they have a market correction, they have to pay the piper, to pay the piper, my collateral is my collateral, all I have to do is work my way out of it. It makes it a little bit easier for a crowdfunding platform to be able to work your way out of a real estate crowdfunding platform.

So I'm gonna open it up for questions, anything that you guys have as far as his questions. Yes. So reads have a tax incentive like you said to pass on. So they have to pay out 90% of their income in order to meet that standard. And why do they become a rate because they become too big, and they have to their requirements for reporting change? So on the crowdfunding platform side, you can only get so big before, the SEC wants to have a little bit more oversight. And there are size limitations of what you can do on a crowdfunding platform.

For instance, up to $10 million, you can raise with 1999 people, once you hit that tear you have to elevate yourself to something different. That's why you're seeing the conversion, their success, right, they become a public company. So success is why they're doing that. That's not a bad thing. Good for it is good for investors, absolutely. It's good for investors, but when you become real, it becomes easier to leverage. Because now you have the attention of banks.

Now you have the ability depending upon the rate depending upon your asset class the whole time. It really changes the dynamic of your business model at that point. But being a return the scrutiny behind that and the examinations with FINRA. That's no small feat and it's very expensive to have been come out, you will probably spend somewhere in the neighborhood of a million dollars in attorneys fees.

Just to put it into perspective, that's why a lot of these crowdfunders what they do is just start a new fund so that they all stay under 10,001,999 people because as soon as you trigger that, it completely changes the dynamic of your company. Senator question of are I won't, I don't need to put people into a fund.

I'd rather sell a collateralized investment. I'm different. I'm definitely different than others you most people will come up here and talk about You know, a platform that involves becoming a read. I mean, eventually, that's where you're gonna land unless you just continue with the fund and the fund of the fund and the fund and the fund. But eventually, you get so many funds out there.

You know, now you've isolated a fund into one product type, and do you have diversification anymore? Right, so you start pigeonholing yourself into these funds that are specific for a certain reason, and a certain reason only. What happens when the dynamic of that market changes. And all of a sudden, single-family homes have outpriced themselves and you need to be in multifamily. But your funds single family, we can do? You pigeonholed yourself. I will never be pigeonholed by that. Yeah. So we stay in states where multi-beneficiary lending is allowable by the state. And so the way that ignites funding operates is we have a borrower that comes to us.

We'll use the Fourplex Investment Group as an example. And they needed to acquire land in order to build multifamily. And instead of going to a bank, where they would probably spend 90 days to maybe six months and getting that financing, do everything but give them you know, 16 vials of blood in their right arm, they would come to us, we can analyze the real estate much quicker, and provide them the financing that they need on a certain date. And they know that it's going to happen, there's not going to be extenuating circumstances or anything along those lines. We then once we know that we're going to fund that project, and we're committed to that borrower, we go out to our investor base, and we ask them if they're interested in investing in that product.

They become multi beneficiaries, meaning they all own a certain percentage of that total project. So we may have a million-dollar project and we may have 10 investors on that particular project. So they each have a beneficial interest. And then they earn based on that beneficial interest as well. Does that make sense? Yeah, so we keep it very specific to each project. So it also gives individuals an opportunity to invest in a variety of different things. So our investors may have a project in Denver, Colorado and Salt Lake City and Las Vegas, and Houston. They could be in multifamily.

They could be in a commercial, they could be residential, they can be apartments. That's how diversified their real estate portfolio is with us. Yes, yes. If you go to our website, you can see what's available. We always have loans available. We fund somewhere between 10 and 15 million a month. There are seven when we run through them. So Nevada, obviously, I actually have 30% of my portfolio right now in Las Vegas, only because it's just the place to be. Even though I had learned a lesson I didn't I've read and said 100. I said 30. Utah, we probably have about 50 million in Utah right now. Colorado.

We love Colorado, Texas, is another state that we like Arizona, kind of up-and-coming Arizona we actually have you on to talk about different asset classes. I mean, we are as diverse as they come. That one is actually senior living. So that one's a little bit different. But make sense in Arizona for many of you who know. We're also we I'm in Chicago right now, and I don't want to be anymore. We're almost out of Chicago and Florida. Those are the states that we're in right now. I love Chicago. Yes. Gotcha. I was actually pointing to behind you. Steve thinks it's all about him. I'm just kidding.

Yeah. So I say yeah, like, Yeah, what's the big deal? No. Yes, we do. So we typically charge a 3% origination fee for a 12-month loan and about 12% annually. And I know people are like, Oh my gosh, how can these borrowers possibly afford this?

Well, that's the whole point. Get in, get it done, and get out. We are not financing that's intended to be long-term. That's what makes us nimble. So if you have a construction loan is 12%. And it takes you four months to build the house. How much did you really spend with us? The same amount you would have spent at the bank. So are we really that expensive?

That makes people think they're like, oh, wait a second. Maybe you're not. They make it work. I mean, it has to work in the scale of economics with them as well. Yeah. The deals range I'm $100,000, we have investors that like fix and flip, I don't want to fix and flip, they love to fix and flip. So 100,000 being low, the largest deal that we have done 15 million at one given time, that it's all debt, no equity, that depends on how you look at that, if you're a borrower, the loan to value in which we're lending sometimes crosses over that Equity Line, because we may give you a little bit extra, depending upon where you're at in the project. I like construction as an example. So we may lend up to a little bit higher percentage than typical, typical meaning 60%, to pushing at 80. I don't love leaving us that equity in there.

Sometimes we become part of their equity play on the debit side if that makes sense. Because they would have gone out and got 40% equity, and really, they're only having to get 20. So we end up playing in that and save them a ton of money, as you know because equity money's a lot more expensive than us. They're out. Yep, they're out of the deal.

Our earnings, okay. So if you're an investor with us, and you want to invest $10,000 $10,000, is going into the investment. Okay, how's that possible? Carrie, the origination fee that the borrower pays initially, is my take, and I charged to service the loan. So I'm usually at four and a half, all in. If I have to take back the property, I become an asset manager, and I have an opportunity, I say an opportunity. I'm probably shouldn't say this on camera. But my owners would not be happy with us. But I put the investors in front of the company.

So if I can return 100% of the capital versus 98%, and I take it in the shorts on the company side, I'll take it in the shorts on the company side, there's a lot more to that 100%, that 2% means a lot more to those people than it does to me, I'll make that backup. So I make my money from the borrower. So glad you asked that question. This probably won't come as a shock to you because I do like to challenge myself. I also run a self-directed custodian. I wonder why. About 70% of my clients on the Ignite funding side, have a self-directed IRA.

But why do they have a self-directed IRA? Because I educated them about it. It is so much easier to raise money with an IRA that's earning 1/10 of 1%, like your savings account than it is to dip into their cash supply. Right. So to answer your question, we're not a fund. So the investment itself, we have people that invest with their self directed IRA, as well as investing, you know, a company trust, individual account, a joint account a miner's account. I mean, we have parents that have enough foresight, you know, to utilize some of their children's inheritance in investing in real estate. It's really unique. It's very interesting, but we mix that we definitely no, no, everybody, everybody becomes in one pot on one project.

That's when I say when I said herding cats is no joke, my friend. You know, I've got companies, I got IRAs that are, you know, moving through the process from TD Ameritrade over to preferred Trust Company, you know, as custodians, we don't like to let go of money. You know, it's, it's, it's a shooting match. And you as a company have to be prepared sometimes to ante up. Right? If I'm shorter, I don't have an initial on something on the compliance side, you you better have a stockpile of funds ready.

Because you don't have enough money to fund that loan on that date. Right. The last thing you want to do is ruin a relationship with a reputable borrower. So you need to make sure that you have some funds sitting on the sidelines for those What if moments are average. And if I take it across the entire board, our average investor is about $100,000 that they invest with us. We are a passive income vehicle for them.

You can always compete with me 50 5050. Remember that? You can do whatever you want. You can compete with me, why couldn't you? Well, that's the cycle of real estate life right there. What you just described is exactly the cycle of real estate life. And I'm so thankful that those people exist. You know why? Because that's who's going to get me out of my $19 million that I just took back. So be careful what you wish for. Sometimes we need those individuals around us. They're paying ordinary interest tax is what they're paying. So businesses, depending upon the type of the trust cash accounts, will receive a 1099 or 299. Excuse me, I just went to my self-directed custodian days, I apologize. That's for distributions on a self-directed around an IRA, but 1099. And then obviously, you run it through your IRA, that's tax-deferred or tax-free.

That's why we inspire. That's why education is there. That's correct. So the funds and the taxation and all of that runs back through their custodian. And it doesn't have to be with preferred trust. We have a lot of clients that don't invest with preferred trust, just because we're affiliated. Sometimes that scares people. Right? You have the same woman who's running both companies. That's a little scary. And others go,

Oh, yeah, if it's Carrie, I'm good. You know, just it just depends. So. But yeah, we send the funds directly back to the custodian on pay off as well. Duration of loans, short term, six to 12 months. Sorry, I didn't get the second part of that question. Answer. Yes. No. And I would love to make that possible. And it's something I say that because I'm kind of like, I would love that to be possible. Personally. You should call me, you should call me. There's there are definite projects that it could be possible. I do have a little list growing of individuals that have asked that question of me. Yes.

I think that's why they're losing money. Because if you look at the financials, there are no two ways around it. Or imagine putting $50,000 into something. And then wondering, just wondering, is it? Did I lose money? Am I making money? Is the project still there? I think it was supposed to pay off six months ago, but I'm not really sure if it has is my money back in my capital account? Well, let me look that up. Well, let me try to call them and you get circled around 16 different countries. I mean, at some point, it comes back to the personal relationship. And so crowdfunding has a purpose. Don't get me wrong. I mean, it is it's, it was revolutionary. But I don't think it was ever intended the way that it's exploded. And been abused.

Yeah, so here's, here's some of what I've seen. I'll always tell you the scary stories, right, so you can learn from them, I'm not going to tell you the good stories, because we're here to learn. And here's the reality of gambling on the spread. When people gamble on the spread, they usually use the word guaranteed.

They literally throw the word out there and say, I guarantee you 8%, they're so confident in their conviction to say that because they're earning 16, what happens when they're not earning 16% anymore? That guarantee goes out the window, and then all of a sudden, what's the next thing they say? I'm sorry, but I lost all your money. So it's good when it's good, but when it's bad, it's horrific. So you have to be cautious if they're getting 16%. Here's the thing if I charge 16% to my borrowers, on a consistent basis, because 14 is usually my average because they're usually nine-month loans. So if I charge 16 to 22%, I see it all the time.

How sustainable is that for a borrower, you're going to have them long-term is a one-time shot. Now you got to go find a new borrower. I have a steady pool of six borrowers and those same six borrowers that I work with time and time again. Because if I had to go out and do the pickup truck and hammer guy, would I be as successful as I am? No, they're gonna have to go find those pickup truck and hammer guys that are willing to pay that 16 to 22%. Time and time again. You run out of them. So you know, it's that slow and steady process that wins.

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