Private Equity refers to the collective capital investment made into companies that aren’t publicly traded. Investors often find themselves going for Private Equity funds to get better returns than they would in public equity markets while also diversifying their portfolio.
The entire foundation of a Private Equity is based on a significant amount of collective capital. Individuals with a high net-worth will invest for a positive Return-On-Investment (ROI) in different Private Equities to make long-term profit.
One of the many reasons investors go for Private Equity firms is the fact that they have connections with Mergers and Acquisitions (M&A) intermediaries, transaction professionals and investment banks. In other words, they know where to invest and how to get you profit.
Private Equity Investment Strategies
The two most commonly discussed investment strategies for Private Equities are:
Leveraged Buyouts (LBOs)
Private Equity firms will finance their purchase of a company through debt that is then collateralized by the purchased company’s assets. Since the debt-to-equity ratio is high, in order to push through and eventually make profit, the company has to be revamped for a better cash flow.
Through Leveraged Buyouts, Private Equities assume control of entire companies by having to pay only a percentage of the purchase price. With the right tactics, Private Equities will then attempt to leverage their investment and hope to maximize the return on their investment.
Venture Capital (VC)
Venture Capital is a form of private equity that goes for startup companies and smaller businesses that have long-term growth potential. The capital is provided by high net-worth investors, financial institutions and investment banks.
While monetary resources are always welcome, what can also be provided are technical expertise that can help said companies with growth.
As they continue to guide the management of the company they’ve invested into, they hope to grow alongside them and add value to their own firm.
Venture Capital has become a dependent source of money for newer companies and ventures, however investors will get equity in the company and they will be able to drive decisions within the company with their power.
Real Estate Private Equity (REPE)
The capital for Real Estate Private Equity is acquired through different investors and is pooled into both public and private investments into the real estate market.
REPE involves acquiring, financing and owning different properties through an investment fund that eventually benefits everyone involved in the long-term.
REPE funds invest into all kinds of real estate opportunities they might see potential in. They will often buy undervalued office buildings, shopping centers, multifamily apartments etc. and renovate them to later sell them off at a higher price.
GCG Real Estate operates transparently. Through our years of accumulated experience in the Real Estate market, we purchase, renovate, rent and know exactly when to exit an investment to provide our clients with short-term gains.
Compared to others, what makes our Private Equity so successful is that we buy in volume, AND we go for undervalued areas that have suffered a considerable economic hit; both of these factors allow us to buy properties at a cheaper rate. Once the purchase has been made, we move towards finally renovating our acquired property. Renovating and decorating the properties add great value to the neighborhood, which finally brings us to the final stage i.e. selling for profit.
GCG Real Estate Private Equity Investment Methodology
GCG Real Estate’s General Partners will start based on their market research to buy undervalued properties with potential for growth. Through our hands-on experience within the local market, our process of purchase and sale works in favor of maximum profit. We will then invest into undervalued properties from private sellers, auctions or institutional sellers.
We thoroughly conduct a set of audits, property background checks as well as any past transactions and contracts that might otherwise flag the property.
GCG’s Real Estate Private Equity adds value to undervalued properties and aims to bring a minimum of 25% ROI per year to its investors. Our purchase cycle and resale cycle reset every 3 to 6 months and our objective is to go for four cycles in one year.
Our network spans across Michigan, California and Florida, where we have built a close relationship with our dedicated and trusted partners.
Structure of Real Estate Private Equity Firms
GCG’s Real Estate Private Equity is based on the General Partnership/Liability Partnership model.
Firms like ours go about obtaining capital from Limited Partners, which is then used to invest into different companies or real estate. While Limited Partners are the source of capital, they do not directly intervene in any decisions.
Did you know? GCG Real Estate has opportunities like the following; buy and renovate a 3-bedroom house in Sacramento for $414,040 and sell it off for $525,000; netting its investors a gross profit of $110,960! There are case studies all about, with profits ranging up to even $400,000!
Our short term offers provide investors a fixed return (7%) which is paid quarterly to them as well as a bonus at term. Find out more in our brochure!