The general partner participates in the upside of the real estate syndication deal. Even though each real estate syndication and sale is different, a general partner always acquires a fee in addition to the equity he earned. The general partner’s fees are clearly outlined ahead of time in the Shares Holders Agreement.
The typical fees paid to the general partner in case of property acquisition or project development are
Acquisition/Transaction Fee. This fee is typically 1-3% of the entire transaction value. A general partner looks over quite a few deals before they find the right one. Acquisition or transaction fees help offset inspection, travel, and vetting costs associated with finding a valuable investment property for a real estate syndication.
Disposition Fee. A disposition fee is what a general partner earns at the end of the deal. This fee is a one-time fee equal to 1-2% of the sales price for reimbursing the general partner any expenses incurred at the sale time.
Asset Management Fee. The general partner also manages the asset, including property management supervision, hiring contractors, managing renovations, up-to-date accounting, and investor communications. The asset management fees equal 1 to 3% of the gross revenue generated by the property.
Construction Project Management Fee. The general partner delivers full services of project, cost and construction management for the real estate projects development on the land plots identified or for the semi-completed properties acquired. The general partner’s services are being delivered by dedicated specialists such as project managers, construction managers, cost control managers, planning engineers, legal counselors and certified site inspectors. The construction project management fees equal 3 to 5% of the total value of the investment.