How to Raise Money for Real Estate Deals: The ‘Funding Soulmate’ Method with Karl Dakin

Karl Dakin (00:00)

Yeah, so the goal is to see if we can determine if there is what we call a funding soulmate. This is a person who needs you more than you need them. They have the money, but they’re like baking a cake and you’re the ingredient that they don’t have in order to finish the recipe. And hopefully there’s no one else who can be that same ingredient in the recipe. So they not only have the funding, but they need you in order to fulfill their mission or goal.

And if you can identify this situation, which occurs more often than most people would think, then it’s not a matter of pitching, it’s a matter of placing an order so you get the money in hand.

Michelle Kesil (02:12)

someone that I’m looking forward to chatting with, Karl Dakin who is a capital coach that supports fundraising for startups, community projects, charities, and government programs. So excited to have you on the show today, Karl.

Karl Dakin (02:28)

Thank you, Michelle. Happy to be a guest.

Michelle Kesil (02:31)

Of course, I think our listeners are really going to take something away from all your knowledge and experience of raising funding for all sorts of opportunities.

Karl Dakin (02:43)

Happy to share as we discussed earlier I worked for over four and a half decades on raising funding. haven’t done it all yet because every day offers an opportunity to do something new and different that I have covered a lot of the basis over that time period.

Michelle Kesil (03:02)

Yeah, absolutely. So for those that are not familiar with you and your world yet, can you share what your main focus is right now?

Karl Dakin (03:10)

It’s so I work with a lot of different projects that are seeking funding and currently there’s a lot of chaos in the capital industry. So we often have to approach this outside of institutional money or outside of standard common funding schemes. So a major project I’m trying to advance is

a bit of an economic development project in a city where we would establish an AI, artificial intelligence and the arts innovation hub, which would have as its core data processing center with its own power. And this would act to as an economic development engine projected to create over 500 new jobs.

And in its optimal state, it would revitalize almost a square mile of a downtown community that’s been sitting pretty much idle and stagnant for many, many years and bring more life and vitality to the downtown area.

Michelle Kesil (04:14)

Awesome, and are you working on these projects in a specific market or is this nationwide?

Karl Dakin (04:21)

My current clients are worldwide. I mentor entrepreneurs from Africa to Europe to Southeast Asia. But most of my projects are in the United States where I have a better idea of what I’m doing and not so much guessing. And from there,

The projects run a range of real estate included from sports complexes. It’s a big issue on my table today where we’re trying to advance youth sports. We’re trying to decrease the cost of youth participation in sports. And that requires upgrading, updating existing sports facilities or creating new sports facilities.

Where again, we’re looking for a multi revenue way of paying for everything so that it’s not a taxpayer burden. It’s can be funded with private equity or other other types of funding.

Michelle Kesil (06:02)

Awesome. So how did you get started on becoming so knowledgeable and helping people with all these funds?

Karl Dakin (06:12)

It’s partly, I think, genetic. I was raised in an entrepreneurial family. I grew up in Eastern Kansas where we had a farm and we had the local Chevy dealership and farm equipment dealership. And we were always engaging and looking at new and different things. And I actually started my first business at the age of seven.

without my parents’ knowledge because I was attending a rural schoolhouse. And I realized that when my parents kept dragging me into town on weekends for music lessons, for which I had no talent at all, that I could walk up to the local drugstore, buy candy, and sell it at a markup at my school. And that worked great for a couple months before the other parents decided that was a bad idea.

Michelle Kesil (06:57)

Amazing. I love the entrepreneurial spirit.

Karl Dakin (07:01)

But yeah, so from there, basically escaped from the farm, went to school, got an undergrad in business accounting finance and then a law degree and then jumped from Kansas to Colorado where I now live and immediately started working with state of the art technology projects with computers and software at the very entry into the computer age.

in the late 70s and early 80s.

Michelle Kesil (07:27)

Awesome. And like, how did you start the funding?

Karl Dakin (07:33)

Every project I got involved with required funding. Anything that’s new under the sun ordinarily doesn’t have immediate cash setting aside to start and operate the project to a point.

of break even or profitability, so you’re always short of money. And the joke on me was every time we drew straws to see who was going to have to raise the money, I tended to get the short straw and was the point person for figuring out how to present an opportunity for funding what would be a workable, viable business model to underlie that. And over time,

that advanced to the point where I started developing my own methods and techniques. The banner behind me, motivated money, is my approach where we try to find those investor candidates who are most likely to invest. And this is done by an analysis of the benefits that they would derive from a particular

business which may or may not involve ordinary investment and from there quantifying qualifying how great that benefit is so we could find that person who’s already pre-inclined predestined to give us money if we can tell them the story correctly with the right offering.

Michelle Kesil (08:48)

Yeah, that’s exciting. What does that look like in terms of telling people the right stories? Is there a certain like strategy or yeah, expand on that.

Karl Dakin (09:00)

Yeah, so the goal is to see if we can determine if there is what we call a funding soulmate. This is a person who needs you more than you need them. They have the money, but they’re like baking a cake and you’re the ingredient that they don’t have in order to finish the recipe. And hopefully there’s no one else who can be that same ingredient in the recipe. So they not only have the funding, but they need you in order to fulfill their mission or goal.

And if you can identify this situation, which occurs more often than most people would think, then it’s not a matter of pitching, it’s a matter of placing an order so you get the money in hand.

But you always start the conversation by knowing who your investor candidate is. And the first sentence is, I’ve got something that might be of help to you. I think it can help you in what you’re trying to accomplish, whether it’s a charitable project or a business project.

And here’s how I think it can help. And if we come to an agreement that it is helpful, then we disclose to them that we may not be as helpful as we’d like to be because we lack funding. And if they can put some funding in our hands, then we can all work together towards mutual outcomes.

Michelle Kesil (10:53)

Yeah, that’s an incredible opportunity that you’re offering.

Karl Dakin (10:59)

Yeah, so it’s it’s common to everything. It really is culture wide, meaning it would be the same approach you would use in the Democratic Republic of the Congo or Europe or Australia, US. Everybody who has money has so many competing interests, and it’s one of the few things that people don’t fully understand sometimes, but it’s it’s almost like the lottery sometimes where you’re doing like, yeah, I’ve got a qualified

but I’m one of a thousand or ten thousand or a hundred thousand people all looking for the same thing. And it’s not just businesses that are competing for the money. It’s anything. It can be the spouse, can be the kids, it can be the church or a community project all saying we need money, which they do. And the person who’s holding the money has to make a decision. And you have to figure out how to be head and shoulders above that competition by offering that person something.

they really want and need, it can’t just be left to a discretionary choice because there’s too many reasons why you may not be the one that’s selected.

Michelle Kesil (12:08)

Right. And how does this correspond to real estate? Are there certain like real estate projects that you are working with or real estate investors that you’re working with?

Karl Dakin (12:21)

The in the the plus arts project we’re working with both private real estate developers who are looking to make a buck by taking an old building and restoring it. They are leveraging then in turn economic development money in the form of urban redevelopment authority local bond money things like that to help cover the cost to bring the building to a point where it’s now usable again and it can

start generating a profit. There are about eight other types of funding that we’re looking at to both increase the yield or ROI to the investor while we’re also trying to be cognizant of what impact are we having on the community so that any upside is not offset by some significant downside, which can happen quite often in a project.

We’re looking at a proposal to build brand new sports complex as we define it, which is again broader because we wanted to bring in wellness for the community and youth programs so that the community is getting multiple benefits and not a singular benefit or what we would call a bad investment in a stadium that’s a single purpose use which can’t generate enough money to pay for the cost.

And there we’re looking at some raw land owned by the city. They’re looking to increase their revenue to make a destination that would bring people into town to create even more revenue of different types of taxation. And so at its core, it’s all economic development centered. But at some point, then we want to bring in the people who can ⁓ actually be the lead developer or a component part of the different elements of this.

We would be looking at property managers, construction, all the infrastructure. Our current trend is towards what we call smart city design, which incorporates the infrastructure above below the ground, as we call it, as well as the buildings above the ground within a singular economic unit. And this allows us to not worry about having to hook in.

to the local utility or get permission from other people that may or may not agree with what we’re trying to do. It gives us more autonomy and more freedom and it speeds process. As anyone in real estate knows, the biggest risk, particularly in pre-development, is before you get all your permits and everything in line, which can kill you after you’ve been working for months or years.

to line a project up only to find out that you can’t even get to the starting line because somebody somebody objects for reasons that may or may not be viable.

Michelle Kesil (15:48)

Yeah, absolutely. That makes sense. What are you most focused on solving or scaling to next in your business?

Karl Dakin (16:00)

We’re trying to deal with issues in the capital industry right now to free up money for projects that are standing idle or need one more piece of money in order to move forward.

The capital industry is a bit of a mess at the moment. A lot of money was invested into real estate, particularly commercial buildings that now are valued lower than the original projection or they were financed in a way where they were dependent upon low interest money in order for their business model to work. Now these are called upside down or zombie projects that

need to be fixed. In some cases, there’s going to be some broken eggs, as we call it, where the businesses are going to fail and the private equity firms may have to take a loss simply to move it forward. But because they’re not exiting from their investments in the way they had planned,

there’s no money to roll over into new investments. So we’re seeing a downward spiral within the capital industries. There’s less and less money coming available for projects to start from scratch.

So in some ways we need to be a doctor and heal or cure as much as possible. And if not, then we need to do triage and have certain projects declared dead and move forward and take a bankruptcy or whatever it needs to be. But that money is sitting stagnant at the moment. And my goal is to free it up to move it into new projects so we can keep moving.

Michelle Kesil (17:39)

Yeah, absolutely. So how does it work to accomplish that goal to free up that money?

Karl Dakin (17:46)

In some cases, we have found that we can repurpose the project, meaning that if it were a single use like a stadium, if we were to surround it with a hotel, with practice fields, maybe innovation centers, other economic development projects, we can bring new revenue to the project to give it greater vitality than was under the original plan.

In some cases, we can work with the city to do a municipal or industry bond that would allow us to refinance a portion of the private debt. This may be an improvement actually in reducing the cost of money to the project, or it may be a little bit of stretching the money over a longer period of time in order to gain a

An ability to pay it back or achieve break even at a lower threshold. So, there’s, it’s, you gotta go deep into the bag of tricks looking for some of these solutions to, see what can be done. But, everybody’s aware of real estate projects where they, they went belly up. And they’re still dead decades later. there’s.

golf course projects, other projects I’m aware of where it just kind of looks like a ghost town because it went upside down in the middle of the project and they never got to revenue.

Michelle Kesil (19:06)

Yeah, that makes sense. What are some of the creative solutions that you’ve come across on your financing journey?

Karl Dakin (19:16)

One of the things I’m working on now that I think is, there was a couple of things tied together. One is called a community investment fund. And this is a business model that’s being advanced by the National Coalition of Community Capital that allows for local investment in local projects to advance the economy and enrich their.

And this model, in order to avoid being caught up in securities laws under the Investment Company Act, calls for 60 % of the money in the fund to be invested in real estate. So it serves as a platform or a basis around which, and then you have the freedom to invest the other 40 % into local businesses.

So I’m working on a model that will be kind of a template for different themed or geographic areas that starts with this community investment fund, but then combines it with either opportunity zone funding or other types of funding to seed capital. And then I’m also pairing this with the ability to raise money through investment crowdfunding.

Under Reg CF and Reg A plus crowdfunding, everyone can invest. It’s not limited just to accredited investors.

And quite often ⁓ part of the problem with a project is ⁓ people who live in a community get upset that the rich get richer and they don’t have an opportunity to invest. And by creating a fund and structuring it correctly and then conducting the right capital campaign, it gives everybody a chance to have a bit of equity in the project going into their community. And they move from what we call stakeholders to stockholders.

And this changes the dynamic, basically the acceptance level within the community. Because if we’re building that new sports complex and only rich people own it, it causes hostility out of the gate. But if everyone who’s got $100 can have a share of ownership in that stadium, everything’s different.

Michelle Kesil (21:24)

Yeah, absolutely. Sounds like an awesome opportunity for everyone to get involved.

Karl Dakin (21:28)

Yeah, it’s something that also can play into workforce housing, which is another area that I’m working with, trying to figure out how do you take a person who’s brand new, unskilled, and still get them to a position where they can buy a house with their first job instead of waiting forever to try to do that and basically not allowed to engage in wealth building.

So ⁓ we are looking at a combination of investment crowdfunding along with employer participation where the employers may use their credit history, their credit worthiness.

to start a project where we would put up the housing, employees would work for the employer for a period of time while renting the same housing. And then after a period of time, three, four or five years, we do a flip that puts the employee in an ownership position with the assistance of the employer. And everybody wins because we get started because the local school

has credit rating, which the first time employee with no skills has no credit rating. And so we’re working on a variety of ways to do that. We’re also looking at what we call private reads where you create a business over the top of a building and then the tenants have an opportunity with every monthly rental check to also through crowdfunding invest into the ownership of the building.

Which separates this out so they’re not just rental tenants and this is true for so many types of things. The artist and.

different things where everybody goes, never have a chance to build wealth. And as a consequence, then they are highly mobile, as we call it. They can leave town in a hurry any time they get a better job. And we want them to put down roots. We want them to think as being part of the community to participate in community projects, which they tend not to do when they don’t know where they’re going be living next week.

Michelle Kesil (23:27)

Yeah, what a beautiful incentive.

So before we wrap up here, if somebody wants to reach out, connect, learn more, where can people find you and connect with you?

Karl Dakin (23:36)

Bye.

I would invite people to go to my website, dakincapital.com. I also share information on raising funding on LinkedIn through my own podcast called Successful Funding and my more optimistic newsletter called Instant Funding. And also I would point out that on my website, I have an AI avatar that I’ve helped co-produce that can answer questions about funding 24 by 7. So while I’m sleeping, it can

still be working maybe to give you some answers to questions about funding. It’s called CAP for capital and ⁓ it’s on my webpage and available for anyone to use.

Michelle Kesil (24:21)

Perfect. Well, I appreciate your time, your story and your perspective. Thank you for being here.

Karl Dakin (24:28)

Michelle, ⁓ thanks for the opportunity to share and hopefully some of the information today can help somebody get a project started or funded that they’re a little challenged with at the moment.

Michelle Kesil (24:41)

Yeah, definitely. And for those listeners tuning into the show, if you got value, make sure you’ve subscribed. We’ve got more conversations with operators like Karl who are building real businesses. We’ll see you on our next episode.