Acquisition fee, asset management fee, disposition fee. Which of these comes out of my $75k?

Take them one at a time, and check the actual definitions in the offering documents because the same label gets used differently deal to deal.

The acquisition fee is paid at closing out of the total capitalization, which in practice means the raise. If the sponsor raises $5,000,000 of equity and takes 2 percent of a $14,000,000 purchase, that's $280,000 leaving the closing table, so the property is funded with less than the full $5,000,000. Your dollars, yes.

The asset management fee is paid out of property operations, usually monthly or quarterly, and it's charged either on gross collected revenue or on invested equity. It reduces cash flow before distributions reach you. It sits on top of property management, and it isn't the same scope. Property management leases units and fixes toilets. Asset management is the sponsor's own work, lender reporting, budget approvals, deciding when to refinance or sell. Whether the sponsor is genuinely doing that work is worth asking their existing investors.

The disposition fee comes off the sale proceeds before the split, so it lands in the waterfall ahead of you.

The out-of-pocket cost on your side of the table is small. Many sponsors want an accredited-investor verification letter from a CPA or attorney, which typically runs somewhere in the $50 to a few hundred range, and you'll want a CPA who's comfortable with a multistate K-1. There's no license and no insurance policy required to hold an LP interest. Your review of the fee page is where your money actually goes.

The asset management fee is the one that changed how I read these. 1.5% on gross revenue sounds tiny until you notice it's coming off the same pool the distributions come from, so in a year where the property barely breaks even the sponsor still gets paid and I get a letter explaining why there's no check.

Ask whether the disposition fee is charged on the gross sale price or on net proceeds after the loan payoff. Big difference.

I pay 8% of collected rent to a manager on my own units and I still spend a couple of hours a month on the stuff a manager won't touch, insurance renewals, the tax bill, arguing with the lender. So the asset management layer isn't fake work, girder. What I'd want to see is whether the sponsor's own management company is the property manager too. When both fees go to the same family of entities the incentive to keep the PM honest gets thin.

Still stuck on something upstream of all this. If the acquisition fee comes out of the raise, then the projected returns in the deck are calculated on capital that's already been reduced by $280k, or they aren't. Two sponsors I've looked at word this differently and one of them shows the fees only in the PPM and not in the model summary at all. I asked for the underwriting spreadsheet and got a PDF back.