A real estate fund model checklist starts with the numbers a lawyer turns into fund terms, so run it line by line before the documents are drafted. In this model, tax was charged on the full property value, two loans charged no interest, cash ran out in year 7 and the fee hurdle reset every year.
This page is the checklist, from one job. If you need a fund model and investor deck built, see our real estate fund model and pitch deck service.
The founders run short-term rentals in a European holiday park. They buy holiday homes and let them out by the night. Now they wanted outside investors in, through a fund. Two strategies sit under one holding company. One owns leasehold bungalows for steady cash flow. The other buys freehold homes for growth in value over time.
Our job covered the investor teaser and the operating model, plus a deck that laid out the fund structure for the lawyers. The teaser came first, and it was the easy part.
A teaser that works in the room and at home
The founder wanted two things. He wanted a deck he could talk through face to face, and a brochure investors could take home. We built one 12-page landscape document that does both.
The readers are local business owners. They aren't professional fund investors. Their market has a history of holiday-park schemes that promised big returns and missed them. So the teaser opens with what the portfolio has already done, using its real operating data. The forecast comes later, with a table that shows what happens if occupancy drops.
The fund model had four problems
The teaser makes promises. The model is where they get tested. Before a simpler version went to the lawyers, we checked it line by line. Four things were wrong.
The first was tax on the wrong number. The model took deferred capital gains tax off the full value of each property. Tax is only due on the gain, which is the market value minus the value on the books. It also used a selling cost that looked more like a buyer's tax than a seller's cost. We moved the tax onto the gain and asked the client's notary to confirm the real selling cost. The fund's value went up once the fix was in.
The second was loans that cost nothing. Two private loans pay interest once a year. The rows that should have charged it were empty, so the model treated both loans as free. Fixing it cut profit and cash in the middle years. We told the founder it's better we catch it now than his investors later.
The third was cash that ran out in year 7. The business itself was fine. One large loan came due that year, and the model paid it off with nothing to replace it. We added a refinancing loan and asked the founder whether he'd rather refinance or raise new equity.
The fourth was a hurdle that forgot bad years. The manager earns a performance fee only after investors get a set minimum return each year. In the model, a year below that line simply reset. Two early years of the base case fell short. We switched to a rule where the shortfall carries forward and has to be made up before any fee is earned. Over the full forecast the manager doesn't lose anything. The fee just arrives later.
Two numbers, both called capital
One trap needed the lawyers. The fund's value at launch and the amount the tax rules treat as paid-in capital are different numbers. People used the word "capital" for both. We put both figures in the deliverable and asked the lawyers to confirm the tax one.
What we built
- A 12-page investor teaser that works presented or read alone
- A fund-structure deck for the lawyers, with slide-by-slide review notes
- A simplified one-tab model of the fund's value and fees year by year, with a worked 10-year example
- An eight-part decision list for the founder, with the questions his advisers had to answer
Why it matters for your fund
A lawyer drafting fund documents works from your numbers. If the model taxes the wrong figure or forgets an interest payment, that mistake ends up in a document investors sign. Fixing it there costs far more than fixing one row in a spreadsheet.
The real estate fund model checklist
- Tax on a sale is charged on the gain, which is market value minus book value
- Every loan has its interest row filled in, for every year
- Cash stays above zero in every year, including the years big loans fall due
- A shortfall against the fee hurdle carries forward to the next year
- The fund's value at launch and its paid-in capital for tax are shown as two figures
- A table shows what happens to returns if occupancy drops
Before a lawyer writes your fund terms, have someone check every line of the model behind them, starting with tax and loan interest.
Questions founders ask
What goes on a real estate fund model checklist?
Check that the model shows the fund's value year by year, the fees the manager earns and the cash investors get back. That means rental income built from real operating data, loans with their interest and repayment dates, tax on the gain when properties are sold, and the hurdle the manager has to clear before a performance fee. Add a table that shows what happens if occupancy drops, and a plan for any large loan that falls due.
How do you calculate interest on a shareholder loan?
Multiply the loan balance by the agreed interest rate for the period, then pay it out or add it to the loan, depending on the terms. If interest is paid once a year, as with the two private loans here, the model needs a row for it every year. Leave those rows empty and the loan looks free, which makes profit and cash look better than they are. Ask your accountant how the interest is taxed.
Should a fund model be checked before the offering documents?
Yes. A lawyer drafting fund documents works from your numbers. If the model taxes the wrong figure or forgets an interest payment, that mistake ends up in a document investors sign, and fixing it there costs far more than fixing one row in a spreadsheet. Have someone go through every line before the lawyer starts, beginning with tax and loan interest. A formal audit can follow.