Skip to main content

So you want money from a family office huh?

A lot of people want to access the family office market . The reason is because they believe that it's an area which they can raise a lot of capital and often in a manner that is much easier. Although the check size might be bigger there's many many things that people don't realize when dealing with a family office. 

In my past I had the ability to raise capital from individuals to family offices to private equity funds, insurance companies and institutions. The biggest difference with institutions or institutional capital is that their decisions are typically made based upon parameters. They have a box or boxes in which they are to invest into. In addition, it's not their own money so because of that they are often removed from any emotions. Sure they want to do a good job but let's face it its not their own money!! 

Family offices, however are different. I would say that family office investors are much more like individual investors. In many ways very similar to that person that just retired and has an IRA with $200,000 to invest, and they need to make a decision on where to put their money. Yes family offices have a lot more money to invest however the same applies to a family office as it does to an individual who has $200,000 to invest.  That money is what they have after they've worked their whole life in order to amass that amount of money.  Because of that they need to make sure they feel comfortable that they're making the right decision. The problem is that although they understood their industry perhaps they were in for the last 30 or 40 years,  they do not understand hedge funds, nor mutual funds,  insurance products,  private equity investments or perhaps even real estate investments. Sure they might understand some of the types of investments,  but not to the extent that one would think. That, combined with the fact that it  took their lifetime to build that wealth, they are wanting to make sure that they make good decisions, especially because unlike an institutional investor emotions get involved. This must be taken into consideration when dealing with family offices and from the points that I just mentioned above is why relationships are the most important thing when dealing with family offices.  They need to trust you and understand so that they feel what they have worked so hard for will grow and not be lost.
Labels:

Comments

Post a Comment

Popular posts from this blog

Harvard's Endowment commits to a target investment range into real estate between 10% to 17% for 2016

Years ago, before the downturn I was paying very close attention to the investing allocation of my Alma Maters Endowments Investing Strategy HMC (Harvard Management Company), especially in the area of real estate.  I believe that not only was Harvard a great place to understand the importance of investment allocation strategies before the downturn but even more so since the downturn. In fact, investors who are looking to enhance the performance of their investment portfolios probably won’t find a better investment model than the one used by the $37.6 billion endowment for Harvard University. The entity in charge of managing the endowment, Harvard Management Company (HMC), has accrued an impressive investment track record across its 41-year history. As of fiscal year 2015, the endowment had produced an average annual return of 12.2% – 290 basis points higher than the average 9.3% return of a typical U.S. 60/40 stock and bond portfolio. The methodology behind HMC’s success i...
1 comment
Read more

"Family Offices NEED to be aware of the impact Blockchain and Cryptocurrencies will have on Real Estate Investing" Here's Why:

·         Blockchain has the potential to revolutionize how the real estate sector operates. ·         It will lower transaction costs  ·         It will provide family office investors easier access to international listings ·         Because of cryptocurrencies there will be no need to deal with different banking systems ·         It will allow the process of purchasing or selling a piece of real estate to be more efficient and accurate ·         Its already happening HOWEVER FAMILY OFFICES SHOULD BE AWARE THAT ·         Some cryptocurrencies have gone under ·         There has been fraud associated with a few them ·     ...
Post a Comment
Read more

6 Things Family-Owned Real Estate Firms Should Know About Succession Planning

For the  family-run firms  in the real estate industry , a crucial concern centers around ensuring the longevity of the business they’ve spent years building and the assets they may have accrued. It usually means  the process  of prepping children to take over the business itself, as well as any assets in the firm’s portfolio.  NREI  consulted with attorneys specializing in succession planning for tips that family-run real estate businesses may want to keep in mind. About succession planning Among the chief goals of succession planning is providing continuity of management, in addition to minimizing the tax costs of transferring property interests to new generations, according to Bruce W. Tigani, attorney and chair of the tax, estates and business practice group at Morris James, a law firm based in Wilmington, Del. “Succession planning ensures the business has the capability of continuing profitability in case something happens to the owner or i...
Post a Comment
Read more