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Learn how a European waterfall investment structure can help minimize risk and ensure that investors are paid back in a timely manner.

The waterfall defines the way in which cash distributions will be allocated between the sponsor and the investor. In most waterfalls, a sponsor receives a disproportionate amount of the total profits relative to their co-investment. For example, a sponsor may only put in 5% of the investment capital but be entitled to 20% of the profits. The typical performance fee is between 20% and 30%, subject to a preferred return hurdle. The preferred return ranges from 7% to 10% annually and can be viewed as an interest rate on invested capital, but it is not guaranteed.

About Origin Investments:

Investing in commercial real estate can seem complicated and overwhelming. But for individuals willing to take the time and effort to learn how to navigate this market, it can be incredibly rewarding. At Origin, we’re dedicated to educating individuals so they can make smarter real estate investing decisions. Our blog has become a valuable industry resource with hundreds of articles to choose from and our newsletter delivers real estate investing education to inboxes twice a month.

Origin Investments is also transforming the way individuals invest in real estate. We’re a Chicago-based real estate investment firm who acquires and operates value-added office and multi-family properties in eight fast-growing markets in the U.S. We invest side-by-side with investors, adhere to a disciplined investment philosophy and use technology to make it easy to manage investments.

Origin’s investment platform is available to accredited investors who share their values and want to invest alongside an experienced manager with more than $700 million in assets under management. Our first two funds are averaging a 24% Net return to investors and have achieved top quartile performance, per Preqin data, and we recently raised $151 million for Origin Fund III.