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Market Inefficiencies
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Tierra Capital looks for situations where it can benefit from market inefficiencies. The following examples illustrate this point:
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Size:
Tierra Capital prefers to target deals requiring from $1,000,000 to $10,000,000 in equity. This is too small for institutional real estate private equity funds (that need to invest $50-100mm at a time). Likewise, this is too big for most individuals/small groups. Therefore, it is sometimes the case (but not always) that deals of this size face less competition than property at either end of the extreme.
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Speed:
Tierra Capital also targets transactions where speed of funding can be advantageous. For example, many commercial transactions can take months to close. It is also the case that when certain information is unavailable (a particular kind of survey or updated
appraisal for example) lenders will either not quote a deal or
delay their underwriting process. In some situations, being able to close faster than the competition can be the key to getting the deal and can result in significant price savings.
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Complexity:
When complexity drives away otherwise interested
parties, Tierra Capital finds that, with
patience and hard work, good deals can be made.
An example of this might be a business owner who
wants to sell both business and land at the same
time and refuses to sell the land separately.
Many real estate buyers and brokers would shy away from this challenge. If we felt we could sell the business at a price that would result in a low basis in the real estate, we would willingly accommodate the added complexity of such a transaction.
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