Here, we’ll walk through the various stages of an investment fund’s life: Behind the Scenes: Form Fund Entities Before you can run the fund, you must form the fund. For a more detailed look at the fund formation process, see our investment fund formation timeline. Before you hold your first closing, you’ll need to: Once Continue reading
Funds and Syndications
European vs. American Waterfalls in Investment Funds
Here we’ll discuss European and American waterfalls in investment funds. A fund’s waterfall is a key deal term affecting both general partners (GPs) and limited partners (LPs). Note: The fund’s waterfall is not determined by the physical location of the fund. We routinely form US-based funds with European waterfalls. For background on how investment funds Continue reading
Investment Fund Side Letters – 10 Common Terms
Here we’ll discuss investment fund side letters. A side letter is an agreement between an investment fund sponsor and an investor giving the investor special rights or privileges. Note: This article will refer to “investors” (also known as LPs, limited partners, or investor members) and “sponsors” (also known as GPs, general partners, managing members, or Continue reading
How Are Investment Funds Structured?
Here we’ll review the basic structure of a typical investment fund. This setup works for funds of all asset classes (venture, real estate private equity, crypto, etc.). Both closed-end and open-end investment funds can use this structure. Here’s a link to the full-sized investment fund structure chart. Who are the parties in an investment fund? Continue reading
Investment Fund Closing Timeline – 10 Steps
Here, we’ll discuss a simplified roadmap to closing your first investment fund. Each fund is unique and this article provides only a high-level overview. You’ll work with your legal counsel every step of the way to ensure you raise your investment fund efficiently and successfully. The 10 steps are as follows: Here’s a link to Continue reading
Syndication Series #005 – Real Estate Syndication Fees Explained
In our last syndication series article, we explored how real estate sponsors make money by splitting profits with investors. Here, we’ll discuss the other way syndicators earn income — fees. Fees vary widely from deal to deal, both in type and amount. Here you’ll learn how to evaluate some of the most common real estate Continue reading
Syndication Series #004 – How Do Real Estate Syndications Split Profits?
Syndications are an attractive way to own real estate because investors can pool their money to purchase a larger property (or diversify across many properties). But how do the investors split the earnings from their investment? Here, you’ll learn everything you need to know about profits splits, preferred returns, waterfalls, and more. If you’re just Continue reading
Syndication Series #003 – How to Calculate Return on Investment (Equity Multiple, IRR, and CoC)
Before investing in real estate syndications, you need to be able to compare different offerings. Here, we’re going to learn about three of the most common metrics for evaluating real estate investments: (i) Equity Multiple, (ii) Internal Rate of Return, and (iii) Cash-on-Cash Return. By using each of these tools together, you can determine which Continue reading
Syndication Series #002 – What is a “Sponsor” in Real Estate Syndications?
The Sponsor of a real estate syndication is the party that organizes the deal. Unlike passive investors, the Sponsor takes an active role in the identification, inspection, and management of real estate. If you’re just getting started, check out Syndication Series #001: What Is a Real Estate Syndication? What Does a Real Estate Syndication Sponsor Continue reading
Syndication Series #001: What Is a Real Estate Syndication?
Are you thinking of investing in real estate but aren’t sure about the day-to-day management responsibilities? Or perhaps you understand the wealth-building potential of real estate but want a diversified portfolio? Today, we kick off a new series on real estate syndications — a powerful way for investors to gain access to the world’s original Continue reading