How long does your Real Estate Fund have to be

Now, there are other issues with funds that don’t show up when you’re doing a project specific. Probably the biggest one is just the length of the fund, right? With a project, obviously, you buy it and then whenever you’re ready to sell it, you sell it and you’re done. With a fund, is it going to be a short amount of time? Is it a five-year fund, a fixed time frame? Or is it an open-ended fund where you’re just going to have it open forever? These are decisions that you have to make on the front end with consultation with your securities attorney to figure out how you’re going to do it. If you just got a fund open where people can come in and out as they please, or at least come in as they please, well, does the investor that came in, is there your first investor in the fund going to be given the same returns as the investor who comes in two years later, where you’ve already got an established portfolio of performing assets? Probably not. So the first thing you got to figure out is how are we going to price these shares of these membership units so that we can properly award the risk-reward for somebody that comes in first or second.

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