Real Estate Equity Waterfalls Explained

Real Estate Equity Waterfalls Explained // Ah, real estate equity waterfalls. One of the most daunting and complicated parts of a real estate syndication or fund. Often times, when reading something online about equity waterfalls or having someone try and explain waterfalls to you can make you even more confused. So what is a real estate equity waterfall, really?

What I often wanted to say to people when I first learning this stuff (but was too afraid to) is, “Explain this to me like I’m a 5th grader.” So in today’s video, I’m going to break down real estate equity waterfalls, real estate promote structures, and real estate syndication structures in a way that actually makes sense.

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[BreakIntoCRE]

Want to see a video on any other waterfall structures? Let me know in the comments. Thanks for watching!

[willyal]

Thank you this will help a lot with my interview!!!

[davidforesto]

I wasnt financial free until my 40’s and I’m still in my 40’s, bought my second house already, earn on a monthly through passive income and got 4 out of 5 goals, just hope it encourages someone that it doesn’t matter if you don’t have any of them right now, you can start TODAY regardless your age INVEST and change your future! Investing is a grand choice I made. Great video! Thanks for sharing!
Very inspiring! I love this""

[vosk]

Excellent. Do your courses include the live, downloadable models?

[bethgrove]

Thanks for that understandable example!

[confideans]

Great to see you on youtube, Sensei!!!

[pablovidal]

Hello| Thank you a lot.
My Cuestion is that you only can apply the promote a posteriori, I mean when the project is finished, because, as I think, during the project life, you only know the cash flow you are receiving each month, but you really don´t know the final IRR of the project until it will be closed ( I mean you sold the property ) so, you pay the basic interest rate each month ( 8% in the example) and then, when you sold or refinance the property, then you really know the amount of profits and you could apply the promote.
Is that as I say?

[ic]

Thank you so much for this informational video. I struggled to understand this in my finance class and got so much clarity from watching this video a couple times.

[nadaaswad]

wow you are excellent at explaining PERE

[treeguygrant]

How can I model a refinance in the middle of the deal?

[whatisanamelol]

Are you using IRR correctly here when you talk about the 8%? If 8% is the rate required to hit NPV of 0, then isn't the father actually asking for an 8% return (not internal rate of return)? When the father asks for an 8% return on his investment, he is essentially stating that he wants to earn an 8% annual return on the $950, 000 he contributed as equity in the real estate property. This is a fixed percentage return on his initial investment and is not the same as IRR?

[Ijoys]

Thankss alott, currently in my final year of BSc in real estate and this vid really help me in my study!

[nayefalomar]

I’m gonna enroll to the annually subscription and will recommend that to all of my colleagues.

Thanks Justin you’re the best

[brickarealestate]

Excelent explanation! Waterfall is always very hard to explain to investors. Thanks

[mikusporcus]

Thank you very much for those helpful comments, crystal clear now !

[doonieize]

Is there anyway you could possibly send me that spreadsheet.... would help a

[marsibes]

Best video to explain this model. Thank you!

[timothybracken]

thank you so much for explaining this so well! I will def sign up for the course. I'm a real estate major and I'm in NYC. I found your videos so helpful. I'm also trying to break into REPE.

[troytakamoto]

Great explanation, but I have a couple questions.  

1. How did you calculate, how much is calculated at the 8% IRR and how much is calculated above the 8% IRR?

2. Is the split based on a sale of the property or after the property is cash-out refinanced after 5 years?

3. What kind of assurance do you give your "uncle"? (i.e. his name is on the title or loan, maybe a separate business contract)?

[prashansagupta]

Is it possible to get any discount on your course?