Our construction edge gives us real cost control, but we’re pressure testing the fund model before going live.High level: 3-tier equity stack, 8–12% preferred returns, bonus equity participation, and full refi payback before we start waterfalling splits.Here’s what I’d love insight on from experienced LPs and GPs:Does this align with what’s actually working right now?

I've been working with foreclosures in South Florida for years, and I’m seeing the same pattern: a slow but steady rise in distressed properties, even among owners with significant equity.What you’re describing aligns exactly with what I’ve found in my own research.

Can you help us understand your apprehension for the fee component you're wanting to avoid?  

Because, first it needs to be an asset class I generally believe in to create strong returns with minimal risk.Then it has to be a group that is both professionally run, with a clear focus, and also strong alignment of interest.Within the alignment: it gets to what Michael was alluding to: the groups that are run to make the sponsors rich right away with copious fees, no true co-invest, egregious waterfalls, etc.  

Inspect each component and decide what truly needs replacing. 

In my experience with doing real estate financial modeling for developers and commercial building acquisitions there are 4 basic profit return components which are Cash flow, Appreciation, Loan Amortization, and Tax Shelter.In your case, I think the key focus should be on the commercial mortgage or loan amortization structure and rate.

Know there will be times that market sentiment aligns with your thesis and times when things will get really slow and lean. 

Not keen on seller financing component.  

Ultimately, it’s about aligning your goals with the right strategy.Makes sense.

The long-term nature of performing loans really didn't align for us.