Structuring Equity

After 8 years of working on the acquisition-side of commercial real estate, I am looking to the next few years as an opportunity to leverage my experience and knowledge to do my own deals. I once attended a conference where the question was asked "How does one go about investing in commercial real estate?" The answer given was "Either you have access to capital, or you have experience underwriting deals, understanding market dynamics, connections with brokers/bankers/owners/etc". Point was, if you want to break into the business, you have to bring SOMETHING to the table.
So I have the experience, having worked on the acquisition of nearly 40 deals totaling close to $1 Billion. So if I were to form my own LLC, find a deal (say an apartment complex worth $25M), and try to structure my equity and debt, how seriously would an equity firm take me?
In Buying Property - Asked by Eric G. - Aug 6, 2009
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Eric G.
Corporate Investor
Beverly Hills, CA

At some point, people who break off from working for a corporation to do their own investing encounter this situation. However, I know a fair amount of small/local investors here in LA who went out and purchased deals in the $20-50M range, and had institutional equity partners, i.e. Lehman, Morgan Stanley, foreign money, etc).
I would imagine that if I were to go to Wall Street and ask for a $10-15M equity investment, they are going to want to know I have a track record on my own....which I do not.
Also, there are plenty of firms that specialize in finding equity and/or debt for deals, but wouldn't the same questions come up? How would anyone in my position be able to successfully raise that type of equity? The companies I have worked for in my career were so well known, all it took was a phone call and we would have half-dozen interested equity partners.
Would an investor be able to look at my resume working for other firms to get comfortable with me?

Aug 6, 2009
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Andres G.
Miami Beach, FL

Bringing equity can be difficult for someone with no direct management experience. Private equity groups are looking for effective asset mangers people who have shown the ability to successfully execute a deal from start to finish. My belief is that if the transaction is strong enough and if there is a well laid plan in place the transaction will get funding.
What I would suggest is that you begin sharing your aspirations with the top investors in your own network. You do most of the work and have them assist you in developing the business plan once you find a qualified transaction. They can in turn add strength to your request by allowing you to use their resume to give groups confidence in your ability.

Aug 10, 2009
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Gregory G.
San Francisco, CA

They are going to look more at the deal than at your resume. Find the deal and you should be able to find the money.

Aug 14, 2009
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