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217 Nick Walsh, co-Founder Global Senior Housing
From Single Family to Senior Living
Global Senior Housing, the company that Nick Walsh co-founded with his father, develops senior living projects in the western United States. Before forming the company and moving to San Diego, they had developed residential subdivisions in Idaho. Despite being relatively new to the to the senior housing space and having only a small company, they currently have projects in Texas, Arizona and Idaho.
Under-Served Market
They figured that senior housing is a lot like the hotel industry in that it is operations intensive and felt that as long as you get a good site and line up good financing partners, the operations really is what makes and breaks the success of a project. So going into the senior industry they wanted to partner with a successful experienced operator who knew what they were doing and leverage off their experience versus trying to start a new operating team themselves.
Their Idaho based operating partner had a building prototype that they had built before and were confident operating.  Nick came on to partner with them to raise the capital and to find and acquire sites so they generated parameters that they use to look at demographics in the supply and demand in certain areas. They started by focusing on Texas and canvassed the whole state looking for the right markets that were under-served for Assisted Living and Memory Care and that had the right demographics for a project to build.  That is how they found their first project and that project, which is in Houston, they funded by crowdfunding the finance.
Leaders of The Crowd
Conversations with Crowdfunding Visionaries and How Real Estate Stole the Show
Discover how laws that gave us crowdfunding were solely meant to finance small companies and yet inadvertently opened the doors to allow you to invest in real estate like never before.
Read the book and listen to the actual conversations.
First Senior Housing Deal; First CFRE Deal
Initially, Nick came across the idea of crowd funding when he was talking to a few attorneys at real estate conferences who were starting to put together PPM Reg D crowdfund deals at the time that the JOBS Act was getting approved and they were formulating the rules for that. There was a lot of buzz in the industry about crowdfunding as a way to raise money.
How to Fund Your Deals
7 Steps to Raising Equity Online
CrowdStreet Marketplace
Selecting the platform that they were to use was a process even back then when there was probably 20 or 30 companies out there already. Nick started his search process by looking at who was doing ground up development. A lot of the platforms were in their infancy and most were doing deals with existing income streams so finding those doing ground up narrowed the field down to just a handful. Adding the extra layer of wanting to do a senior housing deal narrowed things down even further. Nick looked at each platform and who had raised done a successful raise on a senior housing project before, and that is how he landed on the company that they ended up partnering with , CrowdStreet. They had just completed a successful raise for a larger skilled nursing developer that Nick had read about in a senior housing publication and that is what prompted him to call them.
Underwriting & Fees
Interestingly, when Nick first approached CrowdStreet he approached them with a different project that they turned down because the market was a tertiary market in Texas and they explained investors would not likely be interested in such a location. This allowed Nick to bring another in a major metro; something more attuned to what investors were looking for.  Most investors were looking for a city that they knew that they felt comfortable and that is why the project in Houston met the criteria.
The underwriting requirements that CrowdStreet looked at, of course, included the sponsor group; who the operator was and who the developer was. They had a third party market study that justified the demand in the market for the building that they were going to build. Beyond that, one thing that they really liked about CrowdStreet was that they looked at the deal structure and did not really mandate the  deal structure like some other platforms do, but instead guided them through what would be successful. Nick had to put up the fees for the raise whether they were successful or not, and they found that CrowdStreet did not want a blemish their reputation with a raise that was unsuccessful.  After the upfront fee, there is an annual maintenance fee for use of the software which sits on the Global Senior Housing website under the investor link.
Direct Investor Contact
The Process
The process with CrowdStreet was as follows. Nick’s company was given a checklist of documents that they needed to submit for the raise before they went live. They were assigned a designated investor relations person as well as customer relations person who checks in from time to time to make sure thes sponsor has everything that they need to communicate with investors effectively and to make sure everybody is happy.  If an investor has a question sometimes they contact CrowdStreet and CrowdStreet will connect the sponsor, but sometimes they may just connect with the sponsor directly by either email direct telephone call.
75 Days to Full Funding
Once the deal went live, the total raise took about 75 days before the last dollar was deposited into escrow. Total amount raised was $1.2 million on top of which they had about another $300,000 in sponsor equity that Global principals were placing into the project. The $1.2 million of outside equity came from 44 investors. There was a range of investments sizes and this was one thing that CrowdStreet helped structure. Global initially wanted to come in with a $50,000 minimum but CrowdStreet said that they thought the deal would be a lot more successful if the minimum was set at $25,000. In the end their investors ranged from some at $25,000 and up to $100,000. While Nick did a little marketing on their own primarily to investors in Idaho who wanted to get into the senior living space, the majority of investors came from CrowdStreet's marketplace.  There were many investors from Texas since the project was in Houston, but overall there was a wide range of geographical dispersion with most from the West coast or the western states and a few from the northeast and East coast.
Time Intensive Process
The biggest challenge, Nick found, was the way the timing worked on the raise. It started really quickly after launch, with probably half the money they needed raised in the first 20 days or so. Then it slowed down because when a project is placed on the marketplace it comes up first so everybody sees it at the top of the list. Once more projects get posted, Nick found that his project dropped down and he thought that perhaps it took someone a little bit longer to find their deal.  He felt that an important consideration when selecting a site to list a deal on was to look at how many deals are posted. If there are none, that might indicate inactivity; but if there are too many there might be a concern that one’s own deal might get caught up in the wash and not really get the attention that it needs to complete the raise.
Increased Investor Pool
One handicap Nick found with the process was due to the compressed timeline from launch to completion of the raise; it was a very condensed period of time. They were unable to post the project until they had entitlements and were ready to start construction – a CrowdStreet requirement. Their traditional methodology on other projects was that they would start talking to folks throughout the entitlement process, giving them six to 12 months to gather the investor group together. CrowdStreet, on the other hand, looks for products that are ready to go because they do not want to post a project and have investors commit, only to have to then wait for the entitlements which could be an extra three to six months down the line.  Investors want to place their money immediately; they are not going to be around in six months or have those funds to invest in six months.
Most appealing to Nick about the process was in their ability to increase their investor pool and work directly with investors. They have now talked to some investors who have already told them that they want to invest in more deals together. It was a good way to expand their investor pool and Nick liked the idea of giving people, through crowdfunding, the idea that no matter where they are they have the ability to do their own research and invest in a real estate project. Perhaps they did not have any experience in senior housing but they were still able to own a piece of a project.
Distributions Along the Way
The Next Deal
Going forward, however, Nick does have at least one crowd fund project on the horizon.  They are looking at an acquisition, a reposition project in Austin, Texas. They found that when investors looked their other project and/or sign up on CrowdStreet, they indicate which markets they have in interest investing in. Austin popped up on a lot of lists for a lot of investors and so that is one potential deal that has in place cash flow and that is in Austin.  Deal size is $1.3 million of equity so maybe that will be the next crowd fund raise that Global decides to do.
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