The Biggest Structuring Mistakes Real Estate Entrepreneurs Make
The Biggest Structuring Mistakes Real Estate Entrepreneurs Make
Top real estate investors and advisors on the mistakes to avoid when putting together capitalizations and deals
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Starting a new real estate company is tough under any circumstances. And it’s particularly challenging if an operator is looking to raise a fund or mix different kinds of capital—an OpCo-PropCo structure, for example. Even the smartest entrepreneurs make mistakes structuring their financings and deals that can come back to bite in the future.
Today’s letter will highlight 16 potentially devastating errors ranging from debt blunders to equity raising missteps to broader strategic mistakes. To put this list together, we interviewed a handful of investors, operators, and advisors with a wealth of experience structuring real estate deals, including:
Dave Eisenberg, Founding Partner at Zigg Capital
Jason Fudin, Co-Founder and CEO, Placemakr
Robert McDonald, Managing Partner at Cherry Lawn Capital
Ginny Miller, Partner, OneSharpe Capital
Schecky Schechner, Vice Chairman, Real Estate Banking at Barclays
Paul Stanton, Partner at PTB
While this letter will primarily focus on the challenges facing real estate operators building businesses in the brick-and-mortar world, the lessons can be applied more broadly as well.