Real Estate Private Placement Memorandum (PPM) ROI Calculator
Real estate PPMs (Reg D 506(b)/(c) offerings) bury fees in dense docs. Plug in the headline projections and see what LP actually nets after acquisition, asset mgmt, and disposition fees.
| Headline gross equity multiple | — |
| Acquisition fee (one-time) | — |
| Asset mgmt fee (total over hold) | — |
| Disposition fee (one-time) | — |
| Total sponsor fees | — |
| Fee drag as % of LP capital | — |
| Net LP equity multiple | — |
| Net LP IRR (approx) | — |
Real estate Private Placement Memorandums (PPMs) under SEC Reg D 506(b)/(c) bury fees in dense legal documents. A pitched 'projected 2.0x equity multiple' often nets just 1.6-1.7x to LPs after acquisition, asset management, disposition, and refinancing fees. Always calculate net-of-fee returns before investing. Standard fee total: 4-8% drag on LP capital over 5-year hold.
Standard Sponsor Fee Structure
Acquisition fee: 1-2% of purchase price, paid at closing. Asset management fee: 1-1.5% of equity per year, paid quarterly. Disposition fee: 1-2% of sale price, paid at exit. Refinance fee: 0.5-1% of new loan, paid at refi. Construction management fee: 3-5% of capex budget for value-add deals. Property management: 3-5% of revenue (often paid to sponsor affiliate). Read every fee in the PPM — they compound.
Red Flags in PPMs
(1) Acquisition fee above 3% — predatory. (2) Asset mgmt above 2%/year — institutional standard is 1-1.5%. (3) Combined fees above 12% of LP capital over hold. (4) Pref below 6% — LP-unfriendly. (5) Promote above 35% — sponsor-favored. (6) No catch-up after pref — sponsor jumps straight to 30%+ without making LP whole on pref. (7) Affiliated party transactions at above-market rates (property mgmt, brokerage, lending). (8) Sponsor co-invest below 5% — they don't have skin in the game.
Last updated May 2026. Sources: SEC Private Placement Guide.