Real Estate Syndication Fee Structure

The sponsor or syndicator is the person or group of people who sets up the investment structure brings together the pool of investors oversees and manages the investment and ultimately through their efforts generates a profit for the investors.

Real estate syndication fee structure.

One or two single family homes used as rental properties or even a turnkey investment property. The fee ranges between 1 and 2 of the total equity invested and is collected on a yearly basis. Real estate careers generally start small. Let s look into the basics of real estate syndication and how it works in more detail.

The three ways you can profit from real estate syndication. How to structure a real estate syndicate. In addition to standard transactional and. Real estate syndication is a transaction between a sponsor and a group of investors.

It is also very important for syndicators to know their costs. These fees can range anywhere from 1 to 5 of the project size. This often means earning fees at acquisition securing funding refinancing managing construction facilitating property management and overseeing the liquidation of assets. There is a difference between fees that are used to create investment value and exorbitant fees that simply make the managers of private equity real estate funds wealthy at the.

The asset management fee is given to the deal sponsor and used to pay for investment management services and compensate for the oversight of the investment not dissimilar from asset management fees taken by other non real estate investment vehicles. What fees can you charge in a real estate syndication. In the above scenario you will form a separate title holding entity that is also the borrower on any bank loan and sells interests to investors the investor entity. When vetting private real estate investment opportunities look for a fee structure that is largely performance based so the manager wins when the investor wins.

Despite the complexities real estate syndication can be a win win for real estate investors. If you use a limited liability company llc as the investor entity it will be manager managed with a manager and members as the passive investors. Real estate syndication basics. A significant amount of bank income in the syndicated loan market comes from such fees.

A syndicator of real estate will receive compensation for finding the deal doing the due dilligence and even structuring the deal. 11 of the mega wealthy swear by this. To encourage lender participation in syndicated transactions higher fees may have to be paid. For an introduction to real estate syndications read more here.

7 ways to organize structure a real estate syndication. Borrowers pay various fees to participant lenders according to the syndicate fee structure such as upfront fee commitment fee facility fee and letter of credit fee depending on the role on the participant.