YLG Talks Starting Your Own Fund
At the YLG Peer to Peer: Real Estate Entrepreneurship 101 workshop on March 6, 2014, a crowd of young leaders filled a conference room to capacity to hear two of the founders of Calvera Partners, David Saxe and Brian Milovich, discuss their experience as start-up real estate investors. Saxe, with a family history in real estate development, and Brian, whose background is in banking, met as students at UC Berkeley’s Haas School of Business and they both gained experience in the urban investing model while working for CIM. This is where they also met their third business partner, Brian Chuck, who is also a Haas grad, and began planning their new company over drinks after work.
In the early days of Calvera the partners each needed to spend time consulting on the side for interim income while dealing with the “chicken and the egg” problem of raising money without having a deal. For their first deal they used their own funds and use connections they made while working at CIM. Having one deal complete helped build momentum for them as they continued to network through friends and family, finding ways to meet board members of local cultural institutions, and getting in front of anyone who could invest.
As their business got underway each of them were able to contribute their unique skills they learned at CIM: Milovich focuses more on their investment deals and lending; Saxe spends more time fundraising, meeting with potential investors, high-net worth individuals, at their homes over dessert; and, Chuck handles more of the property management issues, in fact it was a last minute property management issue which kept him from attending the workshop. The partners hope they will soon be able to hire staff to handle property specific issues like that while they focus on growing the business. Although, being in the weeds and dealing with every little detail of their properties, from building maintenance to leasing, gives their investors added confidence because of that deeper understanding of what they own.
Moreover, impressing the investors makes them more likely to invest again in future projects and gets them talking to their friends and colleagues which grows the pool of potential investors. Being very transparent about the business operations in newsletters to investors also helps with investor relations and can be used as marketing material, too. Lastly, the partners said helps build investor confidence is funding 5 to 15% of each deal with their own money, so it is clear they have skin in the game too.
That investment in their own properties is what the partners hope will pay off for them in the long run. Although, they might make less now annually than when they were at CIM in the future they expect their investments will add up to much more than what they could earn otherwise.
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