A COMPREHENSIVE GUIDE TO REAL ESTATE WATERFALL EQUITY STRUCTURES

Investing in real estate can be a great way to create long-term generational wealth, but it’s essential to understand the different types of investments and how they work.

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What Is a Real Estate Waterfall Equity Structure?

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A real estate waterfall is a structure in sizeable real estate syndication deals to model how cash flow is fairly distributed to all parties involved.

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The waterfall model defines how profit splits and revenue are distributed. The commonly used modeling tools include the preferred return and the internal rate of return (IRR).

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Cash Flows and Real Estate Waterfalls

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Real Estate Waterfall Components

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A COMPREHENSIVE GUIDE TO REAL ESTATE WATERFALL EQUITY STRUCTURES

Investing in real estate can be a great way to create long-term generational wealth, but it’s essential to understand the different types of investments and how they work.

What Is a Real Estate Waterfall Equity Structure?

A real estate waterfall is a structure in sizeable real estate syndication deals to model how cash flow is fairly distributed to all parties involved.

The waterfall model defines how profit splits and revenue are distributed. The commonly used modeling tools include the preferred return and the internal rate of return (IRR).

What Are Waterfalls?

Cash Flows and Real Estate Waterfalls

The real estate waterfall describes how the other investors are paid their investment distributions through their share of the available cash flow.

Real Estate Waterfall Components

- Return Hurdle - Preferred Return - Lookback Provision - Catch-Up Provision - Invested Capital

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