In today’s downtown commercial market, it seems as if everyone is assembling a real estate fund to capitalize on the profusion of real estate opportunities. The number of funds that are projected to hit the market over the next 12 to 24 months coupled with the unrealistic expectations of returns is a formula for failure. Only funds that are sponsored by seasoned, equity-rich developers will succeed, making it all the more vital to back the right fund.

These ‘opportunity funds’ are simply assemblages of capital, amassed by approaching both multiple high net-worth individuals and equity institutions with money to place in order to earn the returns promised to clients. Once you raise the target amounts, the fund is closed and the developer is required to pursue acquisitions.

There is a distinction between ‘vulture funds’ and opportunity funds; the former typically pursue distressed properties exclusively, while opportunity funds will go after both distressed property as well as other healthy assets that show potential.

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