Even amid a challenged transactions market, Ramel Lee secured the initial capital for his fund's first acquisition and raised the funding before even deciding on the hotel property he would acquire.
Lee, managing partner at RD Lee Capital Partners, said on the recent episode of the Next Gen in Lodging podcast that he went the way of a "blind fund" because he thought he would have better deal-making leverage.
"I was watching people getting hotels under contract, then trying to source their funding. And, my thought process was, 'Well, if I'm capitalized during the search, I can probably get better terms, because I'll be able to close quicker than people who'd have to turn around and raise their money,'" he said.
Lee, who had 22 years of experience in law enforcement and began his entrepreneurial journey in security before evolving to real estate, credited his career as an entrepreneur for allowing him to raise the funding he needed.
"People don't necessarily invest in terms; they invest in people," he said.
Now, equipped with his first round of funding, Lee said he's targeting two to four select-service and extended-stay hotels in secondary and tertiary markets. He expects the second round of funding to open to investors in late September or early October of this year.
"After we identify this asset, we'll open a second round for the same fund to acquire another asset," he said. "We're going to do this until we max out our equity ceiling."
With August known as National Black Business Month, host Davonne Reaves and Lee took time on the episode to recognize that hotel ownership is still an inequitable asset class. Lee said that Black entrepreneurs are able to break into the field when have access to awareness about the process and the right connections.
"Those are two key things for getting into any industry, but particularly for one that you're so underrepresented in: one, getting the access to the information, and then two, getting access to the network," he said.
For more from host Davonne Reaves and Ramel Lee, listen to the Next Gen in Lodging podcast above.