As the real estate market is poised to welcome new investors, RSM has put together a guide for emerging fund managers. Learn more about the steps, strategies, structures, and compliance to consider when launching a new fund in our emerging real estate fund series.
Key takeaways
- Individuals starting funds after other real estate careers should consider outsourcing main administrative roles.
- Technology can go a long way toward establishing a professional, well-organized fund.
Identifying which processes to keep in-house and which to outsource is another consideration for the emerging fund manager, one particularly challenging for those new to the role. For example, consider a developer that historically had a sole source of equity and decides to move into the fund space. Suddenly, the organization needs to meet investor reporting requirements— including partnership information returns and quarterly reports—and faces tighter restrictions on accounting.
Many new fund managers believe they can keep the majority of processes in-house because they come from family firms where processes were handled this way. Troy Merkel, a partner and senior real estate analyst for RSM US LLP, often reminds new managers to focus on their strengths, such as brokering relationships and to outsource the rest. The functions emerging funds should keep in-house include capital raising, deal sourcing, and investor relations, he says.
“The things that are going to be a challenge for you are typically the fund administration, the accounting, the investor portals,” says Merkel. “And so that's where I recommend that they outsource, at least for the early stages of their first few funds.”
Funds can also outsource a partnership information return platform, a partner portal, and similar technologies to help get things up and running and present an organized front to investors from the start.
This article was originally published in partnership with Bisnow.
