I just sold my business and want to invest in real estate PE

[Nick Horob]

I recently sold a software business and looking to allocate a decent portion of the proceeds to RE private equity ($1MM+). I want to be a passive investor.

What would you do if you were me?  What type of deals would you look at?

[Israel Garavito]

@Nick Horob nice work on selling that business!

It depends on what you want as an investor: are you looking for steady, stable cashflow? Looking to value add and cash-out refi? What risk-adjusted return are you comfortable with?

Every good sponsor/manager has very specific acquisition criteria, and each has a different business plan. We focus on multi family that we can refinance in 2-3 years, for example, and hold long term. Others sell earlier. Others focus on core/core plus acquisitions.

First define your criteria and then search out sponsors, not deals. You are betting on the team, not the asset. A good team will make the best of a mediocre asset, and a bad team will tank a great asset.

[Carmen Dettloff]

I would narrow down your criteria and timeline. Make sure you get to know any sponsor and look at past deal performance. 

I would also spread your proceeds among a couple deals. Maybe you try a smaller investment and see how it goes before you invest big if you have time to spend your investments out. 

Feel free to reach out if you want to chat it through. We just did the same thing in 2018. 

Good luck!

Carmen Dettloff

[Account Closed]

I would spread $1MM over about 5 projects. You can split between MF apartments, new developments and maybe hard money lending/notes. This is similar to what I have done.