Starting University LP Fund
As mentioned above I am starting a real estate investing club on my college campus with a good chunk of change from Administration. Our plan is for the club to act as a limited partner in real estate deals and to teach students about investing. The other founder and I have corporate real estate experience (Commercial REIB and REPE internships) but are not experts in deploying LP $. We have a few GP alumni who could provide deal flow and hopefully mentorship as well. What should we be considering that I may not be? (I.e. Legal implications, etc etc)
Someone with more legal background can chime in- but since your group wont be accredited/qualified, you'll have to look for GPs/syndicators that don't have networth requirements or minimums
Trying to do the same type of thing at my university. Mind if I PM you?
"The other founder and I have corporate real estate experience (Commercial REIB and REPE internships)"
Nice.... but not enough to really add much value sorry. Just trying to be realistic. Don't invest all your money in 1 deal or 1 sponsor. Careful about investing in close graduates that are now GPs. Can be conflict of interest and most likely they're not the best place for your capital.
Create an investment criteria that is lower risk and is detailed for deal metrics and sponsor requirements and stick with it.
You're a university fund so you don't need to hit 10+% IRR, so let experienced GPs/Sponsors take 'advantage' of you for lower returns but your money will be safer with better operators.
Request higher preferred returns for lower splits in the future.
Avoid development deals.
Avoid office.
Avoid single family residential (not bad investments, but not your goal as a uni fund / student base).
Avoid niche asset classes (data centres, manufactured housing, hotels, etc).
Just focus on protecting your principal and you'll make out OK.
No new sponsors or GPs. Hit up other real estate funds from other Unis see what they're invested in.
Be prepared to just buy some REITs
How much $ did you get from the uni, is this like a student club (i.e. you got $50k from Uni to host events) or are you actually investing university capital?
I am a UG that is involved in my university’s lp fund, we have a professor that helps oversee and organize all the legalese. Our lp capital comes from an advisory board of alumnis that approve each potential deal. Best advice is to create an investment thesis and target sponsors that follow your thesis - most of the sponsors that will work with you will be limited since capital calls for good deals typically are subscribed within 3 days. Best bet is to find a professor to help you set up the structure and focus on the gp sourcing after you set it up
Do not fall in love with the first couple of sponsors that are looking for money. Most every GP can charm a room or promise high returns, but you need to be highly selective.
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