What types of fees are involved with these investments?

Similar to other passive investments, like mutual funds, there are always managers (general partners) required for managing the asset and improving the performance of the asset. Real estate syndications are no different. The general partners are required to; source the deal, negotiate the deal, raise debt and equity, implement the value-add business plan, in addition to managing the asset throughout its lifecycle.
Common fees associated with syndications are; acquisition fees, financing fees, asset management fees, refinancing fees and disposition fees. Not all fees are applicable to every deal.
  • Acquisition Fees: Compensation for efforts of the manager in organizing the company, sourcing the property, conducting due diligence on the property and making this investment opportunity available to investors. Normally 1%-3%.
  • Financing Fees: Compensation for efforts of the manager in procuring (and signing on) the acquisition loan. Normally 1%-2%.
  • Asset Management Fees: To be paid to the manager for the management of the property. Normally 1%-2%.
  • Refinancing Fees: Compensation to the manager for its efforts in securing (and signing on) a refinance loan on the property. Normally 0%-2%.
  • Disposition Fees: Compensation to the manager for its efforts in disposing of the property. Normally 0%-2%.
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