The Most Common Investor Complaint for New Fund Managers In Real Estate- Natu Myers of


The most common investor objection for a new real estate private equity fund is when investors tell you that I’m not going to invest because. I’m not going to invest because and wants to have only one of the deals in your portfolio. In other words, let’s say I have a private equity fund that I’m selling in the real estate niche. I have like 40 apartments that I want to sell to private equity investors and give them a certain return every single year. You know, and when people go when people who are new to this, they end up going to a large private equity firm that writes big checks. One of the first things that happened is they start saying, hey, I don’t really want all the other deals you have. I just want this one deal. They’ll they’ll look at your portfolio and they’ll look at the one, the number one or number two deals in your portfolio, if you even showed them the deals. And if it’s not a blind fool fund, a blind bull fund, it’s just when you have no deals and you just promise a return. You know what they usually say? The investors, especially the big check investors, would say, Hey, I just want this one deal that you have. And, you know, several of our members that have closed their first they got raises dot com on the on the platform that have closed their first transactions. And what they’ve seen is the same story. (complaints to sec)




They maybe they invest in some real estate here and there and then they get confidence. And then what happens is they say, hey, let me set up this large private equity fund for real estate’s private equity investors. And the first thing that happens is they start going to the big shops and the big guys right away and they’ll just say, Hey, why would I? So in a nice way. So basically, either they say, No, I don’t want to do anything with you. And then a few people that say yes, the only yes that they say is not to invest in the structure of your private equity fund. No, it will just be to say, hey, oh, look at that one deal in your fund. That deal looks pretty good. Let’s work with that deal. And so but then it’s like it cancels the whole point of your fund anyway, because if you want to offer a return to investors and then you want to be the general partner or limited partner, and you set all that up and you do all that stuff for a private equity fund. But then an investor just sees one deal that you have and then they just say, Hey, I just want this one deal, and then they give you a finder’s fee for giving me one deal. Then it puts you in a strange position and it doesn’t follow the structure of your private equity fund in the first place. (complaints to sec)

So how do people fight against this mistake and fight against and prevent this objection? This is I call this the cherry pick objection. When people look at one of the deals in your entire portfolio and then they try to cherry pick it and say that I just want this, I don’t want to talk to you. I don’t want to see you as one of your best deal. And people in the Blind Fool fund, in other words, a fund in the private equity, especially in real estate, when they find a certain type of deal and they or rather they set up a private equity fund and then they say, Hey, I’m going to go find a deal later on, but just put the money in the fund and I’ll find a deal blind pool fund. That’s where that’s why it’s blind pool, blind to the deals that would come into that fund. Many large tech investors, like 10 million check writers, you know, institutions, private equity firms, family offices that are really large. A lot of them say, hey, I don’t really care about this. This one little shop here or this one little guy here. Find me the deal first and then I’ll talk to you. Show me an example. So, you know, there and, you know, in the past of different companies, I’ve worked with people that have had tons of gigawatts of farms, of solar energy deals, and they’re extremely experienced and they’ve done this for years. (complaints to sec)

There are old, there are rich, and they’ve been doing it for a long time. But they still went to the large private equity funds and actually had to pitch it before I got introduced to actual billionaires and when I was had a different securities brokering license. And we actually worked on all this and that was still the objection. They said, Hey, I don’t really care about your fund. I don’t really care about your returns, your little, little peanuts. I just want this one deal and put it in my portfolio because a lot of them would take the deal and put it into their portfolio and then sell it to their investors. That’s really what they’re trying to do in secret. But, you know, that’s what a lot of these people do. So how do we prevent this from happening? And how do like if you’re setting up a real estate or maybe a mergers and acquisitions private equity fund, how do you prevent people from saying that they just want one of your deals in your pie? And he’s trying to, you know, forgetting about your strategy so that you like how do you prevent this from happening, basically. So when one of our members that raises dot com who closed is first real estate syndication and you know attained multimillionaire status through that, that was what he struggled with too. (complaints to sec)

So he went to investors and the investors said, hey, I just want this one deal to close. And during one of our mastermind calls at, one of the people that had already done a lot of syndications and set up a large two large private equity funds, $175 million, one $100 million. They both said to me, he said to him that, hey, maybe just do your one with them so that you can build track record. And then afterwards, then set up the large private equity fund. So really, I guess there are really just two things. Either you change sort of. There are two ways of solving this problem. Either you change yourself and get better or you target different investors who are worse. So those are really the two different ways. And if you try to prove yourself, you know, you just work on doing multiple syndications, close many deals, and then prove and demonstrate to the investor that you can manage your money better than them. Because when somebody tells you that I want to take one of the deals in your portfolio and I don’t want the other deals, what they’re telling you is that they don’t see the value in what you’re offering. They don’t see the value in. They think that the value of them taking one deal and either put it in their portfolio or buying it outright is higher than if you take and if they take their money and then invest with that deal and dilute their capital of all the other deals and strategies that you have. (complaints to sec)

You can also mean that the timeline by which you want to distribute the funds doesn’t align with their investment objectives. And they don’t see the they don’t they’re not convinced that the probability of you hitting their investment objectives aligns with your investment objectives for the private equity fund. So that’s what people are really telling you, that they don’t see the value in working with you in the manner that you are pitching to them. So as a result, they’ll try to sabotage your strategy by just taking one of your deals and one of your apartment complexes that are part of your potential fund. If you’re on a blind pull fund where you don’t even have the deals first, they’ll try to say, hey, go find a deal and then just bring it to me. And then really you just end up being like a, you know, a Thatcher boy or a fetcher lady for the big guy. And if you don’t want that, then you have to improve. And the way that specifically people actually improve themselves is by closing some syndications first. So real estate syndication is really just a capital raise for one particular asset, and it’s splitting the like, let’s say there is like one, two, three fake streets. Ltp A limited partnership geared at acquiring once three fake street and once a three fake street is one place. (complaints to sec)

It’s one area. It’s one, you know, building streets, development, whatever. And that would be the investments and doing a bunch of those first and then pitching to those investors to work on a larger deal in the form of a private equity fund where you have one, two, three. My fund LP which. Has subsidiaries of once three fake streets. One, two, four fake streets. One, two, eight fake street. And you have a bunch of streets underneath this private equity fund later on. Then you have the track record and say, Hey, I already provided returns on my first indication of one building, street development, whatever. And after you uses that, you can leverage that as a track record. And that’s exactly what one of the reasons our members ADI did in the sense of setting up his private equity fund after he closed on his first syndication. And this is how you build track record. The second way is to just lower your standards of the invest, lower the standards of the investors you target. If the investors they target are always telling, you know, just target different investors, target investors that are not sophisticated enough to understand the value of them working on a deals by themselves. Because the reason why people won’t invest with you is because they think that their money will be managed better if either they even in the S&P or to leave it in their own fund or leave it in their own strategy. (complaints to sec)

Therefore, try targeting investors that, you know, within the confines of securities law, you’re able to legally contact them who are not sophisticated enough to understand the I guess they’re too busy or they don’t have the time to manage their money. And by leveraging the private equity fund, you’re able to attract them. There are different ways of doing this. There’s regulation crowdfunding in the states. There is regulation A In the states, you know, there are different exemptions you can use and prospectus objection exemptions you can use up in Canada. And with the Financial Conduct Authority, the ways of compliantly doing it out for the folks in the United Kingdom and everything and in Europe, so target less sophisticated investors who don’t have the time to manage their money and who don’t who aren’t able to do all that stuff. And when you do, then it’s less likely that they’ll say, Let me cherry pick this, because they probably wouldn’t have the knowledge to be able to cherry pick stuff and they’ll see the value in what you’re doing because the lack of value comes from the presence of knowledge. And oftentimes and by targeting those who don’t have the knowledge to do the thing that you’re trying to do for them, you can then create value. So if you flip the script like that, then you can get people who are well suited for your private equity fund. (complaints to sec)

So if you can combine those two and and if you combine those two things, then who knows? Then you may are well on your way here in setting up and actually raising capital for your private equity fund without running into objections. The cherry pick objection. I don’t see the value in investing with you. And so with this, if you want to learn more about both the setting up a private equity fund for the real estate niche or an M&A niche without you bumping into this objection, you know, all you want to do is just head to raise the star call and book a call. So overall, just to recap, one the most common objection that new emerging private equity fund managers in the real estate niche and maybe in an M&A niche would see our investors telling you that I don’t want to invest in your entire portfolio. I just want one of the deals in your private equity fund to to buy and get rid of all the terms of your fund. I just want this one deal. And that objection is called the cherry picking objection, and it comes from people not seeing the value in what you do. Number two, the way to fix this objection is either by improving yourself, by building track record in one out of time deals called syndications, or by targeting less sophisticated investors who see the value in what you do. (complaints to sec)

Because oftentimes ultra high net worth or high net worth, either doctors, lawyers, you know, professionals, they may not be the best or the most adept at understanding the details of private equity fund structure. So if you were to target them and many smaller track investors, rather than targeting the large check investor who is sophisticated enough to know that to have enough processes, knowledge, to see the value, to not see the value in what you’re doing, then you can create value. So basically create value by talking to people who don’t know how to do what you do instead of talking to investors who do know what you’re doing. And if you talk to more people who don’t know what you’re doing and who don’t understand how you generate the returns, who are obviously legally able to invest as per securities law in your jurisdiction, then you’re more likely to be valuable because you own value is only created by getting people to where they want to go faster or easier than how to concurrently do it. And if you’re able to understand that and share that message to investors that fit the mandates of the returns that they’re looking for, then you’ve solved the problem. So with this, if this makes a bit of sense, just hit that like put an end to subscribe. And if you want to learn about how you can raise for your private equity deal, just head to raises dot com and make it happen. (complaints to sec) on LinkedIn

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