In real estate investing, a common limitation arises when many entrepreneurs reach the limits of their available capital. This predicament emerges when the number of potential opportunities surpasses the financial resources they have at their disposal. However, this challenge also presents an avenue to tap into external sources of funding. These sources can encompass private funding from individuals and investment funds that channel individuals’ and institutions’ finances.
In the conversation, Ken explains that as a fund manager, you are an intermediary, and your LPs are investors who have money and are trusting you to deploy their capital for them in an intelligent way. Having a fund comes with some cost, and you don’t work for free, so you want to make money doing a good job. Your compensation as a fund manager is tied to your performance. It’s also worth noting that building credibility and trust with potential investors takes time and experience. So, identify what you want to be good at, whether that is single family, fix and flip, or wholesaling and niching down. Focusing on a niche can set the stage for success.
Ken started his investment journey by investing in stocks after studying Warren Buffet and his principles. He got into the public market and discovered there were two strategies to do it if he was going to help other people invest. Starting a Fund and bringing people to the fund, or managing separate accounts and adding the Fund later. Instead of bringing people to a fund, Ken opted to help them manage their own money and accounts. This approach gave them transparency and visibility into their funds and what he was doing with them and enabled him to build multiple funds. According to Ken, this is a better and more comfortable strategy to offer when you are starting out than bringing people into a fund.
That is what Ken shares with Fuquan today. Remember, with the manage account structure, you manage many accounts and build relationships with clients, which is stickier, and you can provide value in multiple ways. With a fund, you have one fund, and it’s one strategy, and if that strategy doesn’t go well, it’s hard to get another fund going.
Tune in for an in-depth exploration of fund management insights and guidance on establishing and managing a thriving fund. Ken offers a wealth of knowledge that can propel your ventures in real estate to the next level.
Highlights from the interview
- Ken’s career backstory and how he became a fund manager
- Why Ken is so passionate about real estate investing
- The challenges and successes that Ken had creating his fund
- Managing account fund structure Vs. creating a Fund
- How to do strategic partnership as a fund manager
- Leveraging private money to invest in opportunities beyond your capital access
- How to evaluate deals and structures in strategic partnerships and deals
About Ken Majmudar
Kaushal “Ken” Majmudar, CFA founded Ridgewood Investments in 2002 and serves as our Chief Investment Officer with primary focus on managing our Value Investing based strategies. Ken graduated with honors from the Harvard Law School in 1994 after being an honors graduate of Columbia University in 1991 with a bachelor’s degree in Computer Science. Prior to founding Ridgewood Investments in late 2002, Ken worked for seven years on Wall Street as an investment banker at Merrill Lynch and Lehman Brothers where he has extensive experience working on initial public offerings, mergers and acquisitions transactions and other corporate finance advisory work for Fortune 1000 companies. He is admitted to the bar in New York and New Jersey though retired from the practice of law.
Ken’s high level experience and work with clients has been recognized and cited on multiple occasions. He is a noted value investor who has written and spoken extensively on the subject of value investing and intelligent investing. He has been a member of the Value Investors Club – an online members-only group for skilled value investors founded by Joel Greenblatt, SumZero – an online community for professional investors, and has also written for SeekingAlpha – among others. Ken is active in leading professional groups for investment managers as a member of both the CFA Institute and the New York Society of Securities Analysts.