Fees erode more equity than you think
A full example of the impact of fees on investor returns
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Fees erode more equity than you think
Happy Thursday! 👋
I spend a lot of time trying to explain why fees are such a big deal, and acquisition fee drag was actually the topic of my first article on August 30th, 2023 (time flies when you’re having fun).
We all know about return of capital (if you don’t, you should) clauses, but in reality getting your capital back after investing isn’t as simple as it sounds.
Today, I’ll illustrate how losing 25% of invested equity day 1 to fees and transaction costs can easily occur in a real estate transaction. This doesn’t mean you shouldn’t invest, but it does mean that you need to be certain that the assumptions are achievable since the investment has to recover that initial loss on equity.
