Carried interest is how real estate fund managers build wealth. It’s the promote, the performance allocation, the share of profits you earn above and beyond your capital contribution. For most GPs, it’s the single most valuable component of their compensation. And most GPs don’t fully understand how it’s taxed. That’s not a criticism. The rules
How Carried Interest Is Taxed in Real Estate Funds Read More »
When you’re setting up a real estate fund, one of the first structural decisions you’ll face is whether to use an LLC or a limited partnership (LP). Your attorney will have an opinion. Your CPA should, too. Both structures work. Both are pass-through entities for tax purposes. Both can accommodate a waterfall distribution with preferred
LLC vs. LP for Your Real Estate Fund: What to Consider Read More »
If you’re a GP who’s done a few syndications and you’re thinking about launching a fund, the question isn’t just “which is better?” The question is: which one fits where you are right now, and which one fits where you want to be? We work with GPs who run syndications, GPs who run funds, and
Real Estate Fund vs. Syndication: Key Differences for GPs Read More »
If you’re transitioning from syndications to a fund, or launching your first pooled investment vehicle, there’s no shortage of advice about the legal side. Get a securities attorney. File a Reg D. Draft your PPM. All of that matters. But what most first-time fund managers overlook is the financial infrastructure. And that’s where things break
Starting a Real Estate Fund? Here’s What to Get Right on the Financial Side Read More »
Most people think real estate funds fail because of bad deals. A property doesn’t appreciate. A market turns. Cap rates compress. Those things happen. But in our experience working with real estate fund managers, that’s rarely the real cause of failure. The deals often are fine. What kills the fund is everything around the deal.
5 Reasons Real Estate Funds Fail (And How to Avoid Them) Read More »
Most fund managers think about tax strategy at two moments. When they’re launching the fund and when the K-1s come out. That’s a mistake. Tax planning for a real estate fund isn’t a once-a-year exercise. It’s an ongoing discipline that affects how much of your carried interest you actually keep, when your LPs pay taxes,
Tax Planning Strategies Every Real Estate Fund Manager Should Know Read More »
Most fund managers try to handle accounting in-house first. It makes sense. You want control. You want someone sitting in your office who understands the fund. Then reality hits. Your bookkeeper doesn’t understand partnership allocations. Your controller leaves six months in. Nobody on your team knows how to prepare investor-level capital account statements. And you’re
Why More Fund Managers Are Outsourcing Their Accounting (And What to Look For) Read More »
Here’s something we hear from fund managers all the time: “My investors don’t really read the reports. They just want to know if they’re making money.” That might be true for some LPs. But here’s the problem with that mindset: the LPs who DO read your reports are usually the ones who write the biggest
What Your LPs Actually Want to See in Investor Reports Read More »
Most fund managers understand their waterfall at a high level. Return capital first, pay the preferred return, then split the profits. Simple enough on a pitch deck. But when it comes to actually accounting for the waterfall, things get complicated fast. Compounding versus non-compounding pref. GP catch-up calculations. Tax allocations that don’t match cash distributions.
Distribution Waterfalls: What Fund Managers Need to Know About the Accounting Side Read More »
If you manage a real estate fund, K-1 season is probably one of the most stressful times of the year. Your investors are waiting. Their CPAs are emailing you. And every day your K-1s are late, you lose a little bit of credibility. We work with fund managers who range from launching their first fund
K-1 Preparation for Real Estate Funds: What GPs Need to Know Read More »