Real Estate Deal Structures - Fund vs. LLC

Fund pros
-capital ready to move quickly
-no risk to investors not showing up
-steady income for a sponsor
-risk shared by many deals

Fund cons
-pressure to place capital
-constrained to fund purpose
-more paperwork & legal

LLC pros
-flexibility for investors
-better returns(no delay in deploying)
-adaptable for new opportunities
-higher promote fees for sponsor(get paid on good deals & a bad one is contained)

LLC cons
-investors might not show up
-can req some sponsor resources
-no diversification

Picking the best really depends. Funds are a better bet w/ a repeatable process & a big market or when cash is needed quickly. LLCs are more investor friendly & easier to set up.

We always use LLCs since we work in different asset types & locations.