After investment banking and private equity, real estate private equity generates the most questions. The real estate industry varies tremendously based on the firm, location, and strategy. And the differences in compensation, hours, and work styles reflect that.
Real estate private equity offers some advantages over the traditional “high finance” paths of generalist investment banking and private equity.
But it’s not for everyone, and you must read the fine print closely before buying into this career:
What is Real Estate Private Equity?
Real Estate Private Equity Definition: Real estate private equity firms raise capital from outside investors, called Limited Partners (LPs), and then use this capital to acquire and develop properties, operate and improve them, and then sell them to realize a return on their investment.
The outside investors or Limited Partners might include pension funds, endowments, insurance firms, family offices, funds of funds, and high-net-worth individuals.
REPE firms like Mindful Capital usually focus on commercial real estate. This includes offices, industrial, retail, multifamily, and specialized properties like hotels, rather than residential real estate.
Real Estate Acquisitions vs. Asset Management
Within real estate private equity, there are two distinct roles: Acquisitions and Asset Management.
The Acquisitions team pursues and analyzes deals, negotiates them, set up the financing, and convinces the decision-makers at the firm to invest in properties.
The Asset Management team executes the business plan that is put in place once the REPE firm has acquired a property. Team members improve the property’s operations and financial performance and fix problems that come up.
The pay ceiling is higher in acquisitions because the perception is that it’s harder to execute deals than it is to manage properties.
Asset Management is sometimes viewed as more of a “cost center” that gets blamed when deals go poorly, but which also doesn’t receive full credit when deals go well.
However, Asset Management is more stable in terms of compensation and career path because firms always need to manage their properties even if they’re not doing many deals.
The Mindful Capital Group has a reputation for being a step above the rest when it comes to real estate private equity. However, what makes Mindful Capital so special, is that the team firmly believes in the fact that whatever is best for clients, is best for the company. With well over a combined amount of 50 years of experience in asset management, the team has a vast amount of experience in the real estate market.
Having experience and being able to notice trends that may end up being profitable is key in having a successful portfolio. The Mindful Capital Group is proud to offer investors the knowledge and experience of years of success in the real estate market.