Real-world Advice On Managing Private Equity And Real Estate Funds
Previously known as listed and unlisted property trusts, these real estate fund and private equity companies are usually managed by a fund administrator. Although many investors prefer to self-manage their portfolio, a huge number of businesses still prefer to outsource the overall supervision and organization of these funding sources. With no immediate association or relations with either the investor or the business owner, these third-party service providers become valuable allies in expanding their clients' investment portfolio while conservatively keeping down the costs of doing business in a foreign country. Their fund managers and staff members who are well-versed in diverse disciplines, such as accounting, secretarial and public relations, provide valuable insight into managing these investments poured into different industries.
Managing Investments in the Real Estate Market
Despite the global financial crisis in 2008 to 2009 and the continuing fall of house price indices in eight major cities in Australia, the real estate market remains a fertile hunting ground for foreign companies looking for profitable ventures into housing, commercial and industrial property development in the Land Down Under. Yet, the general perception that most of the country's public and private properties have been gobbled up by foreign entities certainly appears untrue. In fact, foreign participation in these offshore funding sources remained between 20 to 25 percent only of total investments transacted from 2010 to 2011 according to the country's Foreign Investment Review Board (FIRB).Most applications from foreign investors targeted the real estate sector in Victoria for residential properties, but the total funds raised were much lower than the mining industry or the service sector.
A real estate fund rather than a direct property investment offers a great advantage to both domestic and foreign investors. Mainly, an investment management company doesn't have to pay taxes for raising the net worth of their clients' portfolios. It's their clients who must pay for income tax based on the annual earnings they received from these investments. They also pay for capital gains tax based on property sales made during each year. Thus, portfolio owners and in-house investment managers only pay for the outsourced fund administrator's services, which are definitely lower than yearly taxes.
Managing Private Equity Funds in Retail, Commercial and Industrial Sectors
Private equity excludes all publicly traded instruments, such as stocks and government bonds. These investments were usually channeled privately into putting up a new company, developing advanced technologies, or buying out a large portion of a sinking corporation. Naturally, investment allocation for a mutually beneficial fund raised from various investors differs greatly from reinvesting a huge account for just one investor.
The solicitation period for fundraising may last from six to twelve months, or even longer. However, when the target amount has been reached, the fund manager may choose to spend the money into more acquisitions for additional profit or to start the exit process, such as the sale of selected or overall assets acquired. On average, a private equity fund exits within five to seven years of investing into a private enterprise. Meanwhile, other fund managers may want to stay with a very lucrative business for only 12 to 18 months, which industry insiders often refer to as flipping or a 'burn and bye-bye' lifecycle.
Fund managers often follow basic principles when raising a portfolio's net worth. These rules generally aim to lower the costs in operations and investments while providing stakeholders greater control over the decision-making process. These points to remember include keeping idle cash to a minimum through dividends or stock buybacks, increasing the debt-to-equity ratio by not incurring more debts, lowering taxes and capital investments, controlling costs and focusing more on profit growth, giving the company's managers stakes in the business outcomes, and forming smaller groups of deeply involved directors.
Managing Investments in the Real Estate Market
Despite the global financial crisis in 2008 to 2009 and the continuing fall of house price indices in eight major cities in Australia, the real estate market remains a fertile hunting ground for foreign companies looking for profitable ventures into housing, commercial and industrial property development in the Land Down Under. Yet, the general perception that most of the country's public and private properties have been gobbled up by foreign entities certainly appears untrue. In fact, foreign participation in these offshore funding sources remained between 20 to 25 percent only of total investments transacted from 2010 to 2011 according to the country's Foreign Investment Review Board (FIRB).Most applications from foreign investors targeted the real estate sector in Victoria for residential properties, but the total funds raised were much lower than the mining industry or the service sector.
A real estate fund rather than a direct property investment offers a great advantage to both domestic and foreign investors. Mainly, an investment management company doesn't have to pay taxes for raising the net worth of their clients' portfolios. It's their clients who must pay for income tax based on the annual earnings they received from these investments. They also pay for capital gains tax based on property sales made during each year. Thus, portfolio owners and in-house investment managers only pay for the outsourced fund administrator's services, which are definitely lower than yearly taxes.
Managing Private Equity Funds in Retail, Commercial and Industrial Sectors
Private equity excludes all publicly traded instruments, such as stocks and government bonds. These investments were usually channeled privately into putting up a new company, developing advanced technologies, or buying out a large portion of a sinking corporation. Naturally, investment allocation for a mutually beneficial fund raised from various investors differs greatly from reinvesting a huge account for just one investor.
The solicitation period for fundraising may last from six to twelve months, or even longer. However, when the target amount has been reached, the fund manager may choose to spend the money into more acquisitions for additional profit or to start the exit process, such as the sale of selected or overall assets acquired. On average, a private equity fund exits within five to seven years of investing into a private enterprise. Meanwhile, other fund managers may want to stay with a very lucrative business for only 12 to 18 months, which industry insiders often refer to as flipping or a 'burn and bye-bye' lifecycle.
Fund managers often follow basic principles when raising a portfolio's net worth. These rules generally aim to lower the costs in operations and investments while providing stakeholders greater control over the decision-making process. These points to remember include keeping idle cash to a minimum through dividends or stock buybacks, increasing the debt-to-equity ratio by not incurring more debts, lowering taxes and capital investments, controlling costs and focusing more on profit growth, giving the company's managers stakes in the business outcomes, and forming smaller groups of deeply involved directors.
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