I finally know what I really want to do. Im not going to divert my attention to the next hot real estate technique as i have been doing. What I want to do, and been trying to do for the longest is to start a real estate syndication fund. I have a lot of questions, but the two i really want to know is what kind of compensation I should give out to my limited partners (That is fair).
I was thinking of doing the normal 2-20 percent rule that most private equity firms give out. Plus split the cash flows 50/50.
If you have the experience, longevity and profitable track record managing real estate successfully good luck to you!
What you pay is dependant on what you structure IE: Debt Syndication, Equity Syndication or a Hybrid Debt / Equity Syndication?
Because your asking this question it tells me your knowledge and abilities are not sufficient right now to successfully operate a syndication!
Investors will want a statement and brief summary of your experience and education / track record when choosing to join and buy a percentage of stock or unit’s in a Corporation or LLC syndication. You will need to supply financial projections, target properties / market and management / structure to prospective investors!
Keep learning and building your record and abilities and you will get there!
An earlier reply was pretty good at highlighting you need more of a track record.
Before you start having a conversation about a fund you really need to learn the laws. You can be found guilty just for talking. Pooling investors capital is a ‘guilty until proven innocent’ area of the law. Consumers should not even know that you have anything to offer until after you are registered.
If you get past #1 & #2, then you would not be in a rush to use a fee structure that happens to match what is common with hedge funds in the listed securities world. Part of the reason they are on a 2 & 20 structure is they are dealing with liquid securities and for the most part can mark to market the assets each day. Real estate is not such a beast.
Lock up periods are also important. Plus a minimum or hurdle rate of return for the investors before you get 20% of the profit.