Free checklist

Everything to do on the property before you raise

The steps from finding a building to submitting it, in order, and how much of your own cash to expect to put up. Tick what is done and see what is next.

How much will I put up?

Free. No account, and your ticks stay in your browser.

Before you submit a deal

Find it and lock it up5
Check the building7
Line up the loan and the manager3
Plan the business5
Get ready to submit it to DoorRaise5

0 of 25 done

Part 1 of 5

Find it and lock it up

Choose the building and get it under contract on terms that leave you room to say no.

Find it and lock it upPick the market and check itRent growth, job growth, vacancy and new buildings coming. Walk the area, and call two or three property managers who work there.Run a first set of numbersRents, expenses, the loan and the sale. If it only works with a rosy rent number, move on. The raise planner shows how much equity the deal needs.Open the raise plannerMake an offer and agree on price and termsA letter of intent with the price, the deposit, the length of the due diligence period and the closing date.Sign a purchase contract with room to back outA due diligence period long enough to finish the checks below, a financing contingency, and the right to hand the contract to the company you form for the deal. Have your real estate attorney read it first.Pay the earnest money depositUsually refundable until the due diligence period ends. After that it is at risk if you back out.

Part 2 of 5

Check the building

Confirm that what the seller told you is true, while you can still walk away.

Check the buildingCollect the seller’s documentsThe last twelve months of income and expenses (the T-12), the rent roll, the leases, tax bills, utility bills and service contracts.Check the rent roll against the bank statementsTenants should be paying what the rent roll says. Visit a sample of units, including the worst ones.Order the inspection and a property condition reportRoofs, plumbing, electrical, HVAC and the structure. This sets the renovation budget and the reserves.Order the environmental report, survey and zoning checkA Phase I environmental report, a survey of the lot and a letter or search confirming the building is allowed as it stands.Read the title commitmentWho owns it, what liens or easements are on it, and what the title company needs to see before it can close.Get an insurance quotePremiums have jumped in many markets. Put the real number in your model, not last year’s.Find out what the property tax bill becomes after the saleIn many places a sale resets the assessed value. Ask the county, and use the new figure.

Part 3 of 5

Line up the loan and the manager

Lock in the two outside parties that decide how the building performs.

Line up the loan and the managerGet loan quotes from two or three lendersCompare the rate, the loan amount, the interest-only period, the fees and any prepayment penalty.Sign a term sheet with the lender you chooseDoorRaise asks for it when you submit the deal. The lender will order its own appraisal and reports, and usually takes a deposit to pay for them.Choose a property manager and review the agreementFees, the reports they send and how quickly they pay you. Their monthly numbers feed your investor updates.

Part 4 of 5

Plan the business

Turn what you learned into a budget and a raise you can defend.

Plan the businessGet bids for the renovation and set the budgetTwo or three contractor bids, and a contingency of 10% or so on top of the lowest sensible one.Set aside reservesEnough cash in the deal to cover surprises and slow lease-up without calling investors for more.Finish the numbers and decide how much to raiseThe purchase price, the renovation, the costs and reserves, less the loan, is the equity. Decide the minimum investment too.Open the raise plannerDecide how much of your own money goes inInvestors look for it. Putting in less than about 3% of the equity tends to raise questions. The calculator below shows what to expect.Settle the fees and the splitYour fees, the preferred return and how profit is shared. They go on the fee card investors read before they commit.See who gets what at a sale

Part 5 of 5

Get ready to submit it to DoorRaise

The last things to have in hand before you add the deal.

Get ready to submit it to DoorRaiseGather the purchase contract, the title commitment and the lender term sheetWe check your answers against these three documents before the deal page goes live.Have a securities attorney review your planDoorRaise prepares the documents from attorney-approved templates. Your attorney reviews your plan and your own situation.Choose 506(b) or 506(c)It decides whether you may promote the deal publicly and who can invest.Take the 506(b) or 506(c) guideCreate your sponsor page and verify your IDIt starts the background check and lets your followers subscribe before the deal is ready.Create your sponsor pagePick a date and a video link for your live Q&AInvestors who can ask questions before they commit are more comfortable with the deal.

0 of 25 done

Next: Pick the market and check it

Create your sponsor page

Your own money

How much should you expect to put up yourself?

Enter the deal. You will see what you may pay before closing, and what investors expect you to invest at closing. Typical ranges, not a quote.

The deal

Purchase price

Renovation budget

Bank loan

As a percent of the total cost.

Total equity the deal needs from you and your investors: $1,710,000 (the cost, with closing costs and reserves, less the loan).

1. Before you close

$70,500 to $200,500

You usually pay these first. Some is lost if the deal dies.

Earnest money deposit (1% to 3% of the price): $50,000 to $150,000
Inspection, environmental, survey and appraisal reports: $15,000 to $35,000
Your real estate attorney: $5,000 to $15,000
DoorRaise setup fee, when you submit the deal: $500

2. Your own investment at closing

$51,300 to $171,000

3% to 10% of the equity. Investors want to see you in the deal, and putting in less than about 3% tends to raise questions.

In all, if none of it were paid back to you

$121,800 to $371,500

Many sponsors are reimbursed for the earnest money and the reports out of the raise at closing, and some count them toward their own investment. Agree that in writing with your attorney.

Not from your pocket: DoorRaise’s $5,000 closing fee comes out of the funds raised, only if the deal closes, and its $3,500 yearly fee comes out of the property’s income. It takes no percentage of your raise.

Questions

Do I need to finish the whole checklist before I make my sponsor page?+

No. Your sponsor page needs none of it. This list is for the deal: you can work through it while the building is under contract, and submit the deal to DoorRaise once you have the purchase contract, the title commitment and the lender term sheet.

How much of my own money will I really need?+

Two amounts, both ranges. Before closing you usually pay for the earnest money deposit, the inspection and other reports, and a real estate attorney, and some of that is gone if the deal dies. At closing investors expect you to invest too, commonly 3% to 10% of the equity. The calculator on this page works out both for your price.

Do I get the earnest money back?+

Usually it is refundable until the due diligence period in your purchase contract ends, and at risk after that. At closing it is applied to the purchase price. Whether you are paid back from the raise, or it counts toward your own investment, depends on your deal, so settle it in writing with your attorney.

What does DoorRaise charge, and who pays it?+

You pay a $500 setup fee when you submit the deal. The $5,000 closing fee comes out of the funds raised at closing, only if the deal closes, and the $3,500 yearly fee comes out of the property’s income. DoorRaise never takes a percentage of your raise.

Is this advice?+

No. It is a list of what sponsors commonly do and a rough estimate of what it costs. Real costs depend on the building, the lender and the market. Your attorney and your own research decide what is right for your deal.

Does the checklist save my ticks?+

Only in this browser, on this device. Nothing is sent to DoorRaise.

A general checklist and a rough estimate, not legal, tax or investment advice. Offers on DoorRaise are open to accredited investors only. Investing involves risk, including loss of the entire investment.

$$$

Found a building? Start with your sponsor page

Create it free today, with no deal needed. We check you while you finish the list, and your followers can subscribe before the deal is ready.

Create your sponsor page Plan your raise