Understanding Fees and Splits: The Backbone of Your Syndication or Fund

When you're setting up a syndication or a fund, it's helpful to understand the various fees and split structures that can help you earn for the work you're doing. Fees are like your pay, they should reflect the work and effort you put into managing the assets, dealing with investor relations, accounting, and market analysis. Typical fees include asset management fees, development supervision fees, property management fees, acquisition or disposition fees, and real estate agent fees.

Split structures, on the other hand, are your profit from the venture. There are three common types: a waterfall split, straight equity, and a harvest promote. The waterfall split, often with a preferred return, is the most common where profits are divided between the investor and sponsor in a certain ratio. Straight equity involves buying a property at a certain price and charging investors a higher price, keeping the difference as your share. The rare harvest promote involves the sponsor taking the first 10% of profits after selling assets and returning investors' money.

Read more about Reg D - What is Reg D? The King of Securities Exceptions: https://www.moschettilaw.com/reg-d/

Read more about PPMs - What is the purpose of Private Placement Memorandum (PPM)?: https://www.moschettilaw.com/do-i-need-a-ppm/

Moschetti Syndication Law Group is a boutique syndication law firm, serving small and growth-bound syndicators, as well as private equity firms. Our attorney, Tilden Moschetti, is determined to keep the firm’s ‘boutique’ size so we can tailor the services to each client’s unique needs without turning the firm into a faceless factory churning out private placement memorandums or passing unnecessary overhead expenses onto our clients. (As our client, you’ll only pay a fixed fee, so no surprises.) As for the client experience, we give real-time answers with Tilden Moschetti without making you book an official appointment or get passed along to associates or paralegals. We’ll work with your ambitions and overall vision to help you close the current deal and fill in that ‘missing’ piece – whatever you need – to keep adding more syndications to your portfolio. We keep syndicators syndicating (TM).

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