ipate in profits only after meeting specific return benchmarks for you, the investor.
4 REAL ESTATE PRIVATE EQUITY FUNDS COME IN ALL SHAPES AND SIZES No two funds are the same. Some are set up to invest in one specific property, while others purchase a variety of prop- erties to provide diversification. Some are designed to produce monthly cash flow, some are designed strictly for long-term capital gains, and others will provide a combination of cash flow and gains. Some funds are designed to keep capital de- ployed for a single year, while others may have a five- to 10-year outlook. Invest in the fund that fits your parameters. 5 REAL ESTATE IS A BUSINESS, AND AS IN ANY BUSINESS, YOUR TEAM IS YOUR MOST VALUABLE ASSET The team supporting the fund should have expertise and a proven track record with the types of properties the fund pur- chases. Remember, when you invest, you are putting the fund management team to work on your behalf. That team should operate with full integrity and transparen- cy. I believe the team is the most important factor in any private equity fund’s success. It is important for every serious real estate investor to understand these types of investments. As you start your research, you’ll quickly find that a whole new world of investment opportunity is now more readily available than ever before. This shift is a significant benefit to investors and the real estate industry indefinitely. • DISCLAIMER: Information is provided for educational purposes only and may not be relied upon in connection with the purchase or sale of any security. All investors should seek professional counsel and fully understand each offering prior to making an investment..
able to those looking to add commercial real estate to their portfolio. Investment amounts vary depending on the limits determined by the fund manag- er. Nowadays it is common to see mini- mum investment amounts set at $50,000 or sometimes as low as $25,000. In other words, you can add large properties like an airport hotel, professional office complex or 200-unit apartment community to your portfolio with a five-figure investment. KEYPOINTS TO CONSIDER This presents an incredible opportunity, but there are key points to consider before investing in a real estate private equity fund. 1 DIFFERENT ASSET CLASSES MOVE IN DIFFERENT MARKET CYCLES We’re currently finding outstanding
value-add opportunity in hotels, profes- sional and medical office properties and self-storage facilities. 2 INVEST IN AREAS YOU KNOW Commercial property is most stable in cities with a diversified economy. Sub-markets should be areas where “normal people” tend to be. For example, a high-end golf resort in a vacation spot will tend to be more volatile during a recession than a major brand hotel next to an international airport. 3 THE FUND STRUCTURE IS EASILY AS IMPORTANT AS THE PROPERTIES THE FUND BUYS A well-structured fund is one where the manager is highly incentivized to make the properties perform at their maximum potential. The fund manager should partic-
Zach Fuller is Senior Vice President- Investor Relations overseeing the Wealth Development Department of Caliber Companies. As an entrepreneur, he has
built businesses in such industries as website design, information marketing, e-commerce and real estate investment. www.CaliberCo.com
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