“For example in Los Angeles, where there is a major drought and earthquakes, homes, condos, and multifamily units will need to have smoke and carbon detectors, low-flush toilets, water-efficient shower heads, gas shut-off valves installed prior to the closing. This is used to pay our acquisition and asset. The asset management fee is 1.5 per year, based on committed equity. In a fund structure, investors commit a fixed amount of capital to the fund and start paying fees based on their commitment. “The compliance fees will be different from state to state, county to county, and city to city-this all depends on what is in need of compliance in each area,” he explains. Private Equity Real Estate Fund Transactional Fees. You might also encounter fees associated with bringing your home into compliance with local city, county, or state codes, Morgus says.
However, Morgus says, in Los Angeles it’s common for the buyer and seller to both pay escrow fees, while the seller usually pays for any title and all HOA transfer fees along with the city and county transfer taxes. In most cases, syndicators will charge a 1 to 3 percent asset management fee based on the gross revenue collected from the property and would be paid out either monthly or annually. “At the same time, the seller will be responsible for city and county transfer taxes and HOA move-out fees.” The asset management fee serves to reimburse the real estate syndication company for operating and managing the property during the investment. It is less common for private equity real estate funds. Before going into more detail, consider this if your investment property is rented out for, say, 500 per week, your property manager is going to work out. The acquisition fee can range from 1 to 2 of asset size. Acquisition Fee : In individually syndicated deals, as opposed to funds, syndicators may charge a fee for their effort in putting together the capital needed to close a deal. In truth, there are an infinite variation of fee. At one point, a couple years ago, I wrote two whitepapers about the various different fees. “For example, in San Francisco it’s typical for a buyer to pay for the escrow, title, and any homeowners association move-in fees involved in a transaction,” says Matthew Morgus, a Realtor® with Compass in San Francisco. This fee can range from 0.1 to 0.2 of invested equity. IN REAL ESTATE SYNDICATION Clients often ask about the different fees that syndicators typically charge. Whoever pays transaction fees tends to come down to the city in which you’re selling your home. They tend to involve escrow, title, homeowners association, and city and county transfer taxes. There can also be transaction fees that have nothing to do with the money a broker takes home.
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