Off-Market Deal: Case Study Help
For an interview (small REPE fund) I am asked in the deal case study about how would I go about getting a resi owner to sell a property to me off-market. The owner is keen on selling (we don't know if he is distressed) and taking his property to market, but has not done it yet (no brokers have been hired). The seller is a mom&pop and rather unsophisticated.
I don't have much deal experience, so I am afraid of saying something dumb here. Would be great if some of you could sense-check my thinking.
-Quick execution. The REPE fund is well capitalized and doesn't need much financing to close, a real plus in the current market
-No broker fees, no process headache
-The REPE fund is well-known in that market and has a low cost of capital. We're not looking to fleece him, we'll obviously match our IRR requirements (and more hopefully) but he can expect we'd pay a fair price. He could get a better price maybe by going to market, but perhaps not worth the pain for not much gain. Our reputation is stellar and if this deal goes well we could do many more in the future.
-We have a strong expertise in that market/sector, the due diligence process will likely be shorter than for the average buyer
Any other tactic in this situation? I've thought about putting the property in a SPV and structuring a share deal (vs. asset deal) which could benefit the seller as well. Is there anything I should dig up around tax structuring as well to make the deal more enticing for the seller (if the property has some tax loss carryforwards for example)?
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