The Real Estate Equity Waterfall Explained

Описание: How does real estate private equity actually work? And how can a GP (general partner) who invests 5% of the equity walk away with 30% of the profits?

In this video, I break down real estate equity structures step by step using a simple, realistic example. We cover the capital stack, the difference between a GP and LP (limited partner), what a preferred return means, and how the 70/30 promote split works. I also explain how the waterfall distributes profits at sale, how carried interest is earned, and why co-investment creates real alignment.

If you’re investing in commercial real estate, you need to understand the waterfall before wiring money into a deal. If you’re raising capital, you need to know how to structure incentives that are fair and performance driven. This structure is what allows private equity real estate to function, scale, and attract capital.

Chapter
0:00 How does real estate private equity work?
0:31 Real estate equity waterfall
1:13 Example: Industrial property deal
1:57 Now you are the general partner
2:25 Limited partners
2:47 How does the waterfall work?
5:21 How does the capital stack look?
6:04 Selling the property
7:43 5% equity and 30% profits
8:48 Why does this structure exist?
9:08 What you risk
10:00 What you need to understand as an investor
10:25 What you need to understand if you're raising capital

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Thank you for checking out the channel. If you want to learn more about commercial real estate, you’re in the right place.

I’m Brandon Avedikian, founder of Aspire Commercial, a full service commercial real estate brokerage and property management firm based in Houston, Texas.

I started Aspire in 2023 to build a modern commercial real estate firm that uses content, social media, and technology to reach the right audience and deliver better service than clients thought possible.

Since then, we’ve grown to 25+ team members across several countries. We help:
• Investors keep buildings full, manage more efficiently, find new deals, and sell when the time is right
• Business owners make smart leasing and purchase decisions so they can focus on running their companies

Everything I share here comes from the trenches. Real lessons. Real insights. Real results.

Here’s to building for the long term.
– Brandon