Alternative Commercial Mortgage Lenders – Hedge Funds & Private Equity

Hedge funds and private equity firms are investment companies set up by Wall Street investment banks and funded by wealthy individuals and cash rich corporate entities. Unlike standard, publicly traded mutual funds, hedge funds are largely unregulated and have much more leeway in their investment choices. Many of these funds have recognized the opportunity that’s emerged in commercial real estate lending, and have stepped in to fill the funding gap. The money managers in charge of these massive pools of capital are savvy investing pros, they know a good deal when they see it and can be very nimble. Hedge funds and private equity funds are not afraid of risk; in fact they thrive on it. If they like a deal, they make decisions quickly and can close loan or equity financing in just days.

There are many private funds that specialize in commercial real estate investing or have a commercial mortgage lending division. They are cash rich and actively seeking quality deals to fund. They can be an excellent alternative to banks and other traditional lenders.
But, be aware, they are very professional and highly sophisticated. Do not approach hedge funds with shoddy or incomplete packages. They’re pros and work exclusively with other pros.

Hedge fund and private equity people have a Wall Street mentality; they are traders art heart. When they look at a deal they want to be able to make decisions quickly.

When approaching a fund you’ll want to have a complete, well documented package ready to show them at a moments notice, but don’t give it to them all at once. Having worked for Wall Street firms for more than 20 years, I’ve determined that the best way to approach money mangers is with a concise, well written 1 page deal summary.

Sum-up the selling points of your deal on a single sheet of paper, stressing the profit potential, the investors level of experience, the strength of the location and some of the other strong points of the project. They’ll appreciate the fact that you respected their time by being brief. If they like what they see they will ask for more. Give them precisely what they ask for; don’t bog them down with documentation until they tell you they want to see it. Sell them the big story before you try to sell them the details.

If you want to secure funding from a big private equity shop or a hedge fund, I’d strongly suggest you utilize the services of a professional intermediary with Wall Street experience. They can speak the language of fund managers and know exactly what’s important to highlight about a particular deal. These funds tend to operate like private clubs, it helps a-lot if you have an “in”. If you are fortunate enough to develop a relationship with this unique type of lender, you will enjoy a seemingly endless source of capital.

MasterPlan Capital – Commercial Real Estate Investment Banking – Commercial Mortgage Loans – Equity Financing – Asset Management – Prompt, Professional Service – Quick Closings Available
The author, Glenn Fydenkevez, has more than 20 years experience working with Wall Street Investment brokerages firms. He is currently the President of MasterPlan Capital LLC.

Advertisements

Tags: , , , , ,

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s


%d bloggers like this: