Whenever we were finishing up a deal, investors were always asking, "what's next?"
With the old model, we were having to find the perfect deal for just the right amount of capital for each individual investor.
If the investor was short the amount of capital needed, we couldn't make up the difference with another investor. We had to use our own capital or find another investor who had just the right amount.
It was like playing Tetris, always trying to find just right amount of capital for a perfect fit in time.
Multiply this by 40-50 deals and you either have a huge amount of your own money invested in projects or a lot of investor capital sitting on the sidelines that eventually leaves and finds a new home.
The fund model also assists with company cashflow. Real estate companies can experience cashflow issues due to the length of time until a cashflow event, operational costs, unforeseen project expenses, and unexpected market risks.
By running a fund, it allows the operating company to take just enough capital from the initial stages of the project in the form of an acquisition fee or GC fee to cover overhead so the operating company doesn't experience unnecessary duress during the life of the project.
In other words, It smoothens out cashflow.
It also allows investors to pool capital together with shared ownership so nothing is sitting on the sidelines. Every dollar raised goes to use.
And that's just a few of the benefits! Check out today's episode for more info on why we started a fund.
What we cover:
- Benefits of a fund
- The reasons why you may want to start a fund
- Why funds could be a better option for investors
Interested in learning more about how you can receive passive income from recession resistant assets? Visit www.hbgcapital.net or schedule an introductory call with our team today. Schedule a call with our team: https://calendly.com/hbgcapital/40min
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