Real Estate Opportunity Funds
Generally, the best time to acquire good quality commercial real estate is in the years following an economic recession. Our recent massive recession has provided savvy real estate investors with the opportunity to capitalize on the excesses of the prior cycle. Loose underwriting standards and excessive leverage have been the primary contributors to the overvaluation of various real estate assets during the peak years.
The unwinding of these assets has created a potential buying opportunity for the opportunistic buyer who has the capacity and experience to acquire these distressed assets at a discount to their intrinsic value, stabilize the property through lease up and capital improvements. Once stabilized, these assets can then be sold into a recovering market.
Real Estate Opportunity Funds typically make debt and equity investments in distressed assets that have upside potential and that can provide investors with potential cash flow during the holding period of the investment. While these types of investments do have upside potential, a significant amount of work and repositioning needs to take place with distressed assets prior to realizing any potential gain. Some of the risks involved with opportunistic funds include effective management, financing capabilities of the fund sponsor, property specific risks, market risk, loss of principal and a lack of liquidity among others. For more information pertaining to the benefits and risks associated with this type of investment, please contact us at 844-427-1031.