CRE Fund vs JV: Seeking General Information and Guidance for Setting Up

Multi-Family and Apartment Investing
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CRE Fund vs JV: Seeking General Information and Guidance for Setting Up

Nadia Jones
Member since 2024 · 6 posts · 0 votes

Also posted in Getting Started Forum, but figured multifamily category may also generate some responses...so posting here as well. Thanks in advance for sharing your expertise!

I'm currently evaluating whether to go with a Fund Model instead of a traditional JV for an upcoming multifamily project, I will be working as a developer looking to do work with a more experienced developer on a larger scale multi-family opportunity. While I have a general understanding of what it takes to set up a fund, I'd love to tap into the collective wisdom here. For those of you who've chosen the fund route. The questions I'm most interested in having answered:

- What resources or frameworks were most helpful in structuring and launching your CRE fund?

- Question for investors: What can a developer, with less experience w/large scale deals, do to bring value to a more experienced developer?


Also would love answer to the following:

- Are there any specific challenges or advantages you experienced compared to a JV structure?
- Any lessons learned or best practices you’d recommend for someone leaning toward this approach?

I’m all ears for any guidance, recommended reads, or war stories from those who’ve been down this path. Really looking forward to hearing your insights!

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  • Charles Seaman
    Apartment Syndicator · Charleston, SC · Member since 2017 · 519 posts · 631 votes
    1y

    @Nadia Jones Starting and running a fund is a separate business because it's something that you need to actively market for and regularly work on attracting capital to invest in. While there are definitely benefits to running a fund, it's tough to achieve success with funds as a beginner because oftentimes investors are attracted to the track record of the person or team running the fund. A JV structure is good for a one-off deal because the only commitment you have is to the investor(s) and that individual project or deal.

    So in part, the answer to your question depends on what your objective is.  And in part, it depends on the investors and capital that you have access to (this tends to play a factor in many decisions when raising outside capital).

    If you do want to go the fund route, you might want to consider using Avestor.  They run a customizable fund platform that many fund managers have started using in recent years.

    I'm not involved in the development space much, but a newer person can generally only offer so much to a more experienced person in this business.  The biggest things you can offer in development are finding a deal, finding capital, or construction expertise.  If the developer that you're partnering with has experience doing similar deals, then there's a good chance that they have construction expertise and easy access to deals.  Capital always tends to be the sticking point, especially right now due to market conditions.  If you can align with capital partners who want to fund deals for your more experienced developer partner, then I'm sure that will make you instantly attractive to them.

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  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    1y
    Quote from @Nadia Jones:

    Also posted in Getting Started Forum, but figured multifamily category may also generate some responses...so posting here as well. Thanks in advance for sharing your expertise!

    I'm currently evaluating whether to go with a Fund Model instead of a traditional JV for an upcoming multifamily project, I will be working as a developer looking to do work with a more experienced developer on a larger scale multi-family opportunity. While I have a general understanding of what it takes to set up a fund, I'd love to tap into the collective wisdom here. For those of you who've chosen the fund route. The questions I'm most interested in having answered:

    - What resources or frameworks were most helpful in structuring and launching your CRE fund?

    - Question for investors: What can a developer, with less experience w/large scale deals, do to bring value to a more experienced developer?


    Also would love answer to the following:

    - Are there any specific challenges or advantages you experienced compared to a JV structure?
    - Any lessons learned or best practices you’d recommend for someone leaning toward this approach?

    I’m all ears for any guidance, recommended reads, or war stories from those who’ve been down this path. Really looking forward to hearing your insights!


     Simple:

    JV if its one other partner, a fund is if you have multiple funding sources.

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