How to Start a Real Estate Fund: A Guide for Small Investors

Photo of author
Written By Tommy

DealBloom aims to share the latest tips and strategies to help realtors, brokers, loan officers, and investors navigate the world of real estate.

If you’re like many small investors, you may be wondering how to start a real estate fund. Fortunately, it’s not as difficult as you might think. In this guide, we’ll show you how to get started and what steps you need to take in order to succeed.

Table of Contents

How to Start a Real Estate Fund

When thinking of how to start a real estate fund, there are many different factors that you need to consider when defining your strategy, such as your goals, risk tolerance, and time frame. Once you have a clear idea of what you want to achieve, you can start to research the different types of real estate investments that will help you reach your goals.

Define Your Investment Strategy

One of the most important things to remember when developing your strategy is to make it relatable to the reader. You need to be able to explain your strategy in a way that is easy to understand so that they can see how it will benefit them.

If you can do this, you will be well on your way to creating a successful real estate investment strategy.

Find Potential Investors and Partners

Are you thinking about starting a real estate fund? If so, you’re not alone. Many investors are interested in this type of investment vehicle.

There are a few things you need to do in order to get started. First, you need to find potential investors and partners. This can be done by networking with other real estate investors, attending industry events, or even online.

Next, you need to put together a pitch deck. This is a document that outlines your investment approach and why you believe it will be successful.

Finally, you need to raise equity capital. This can be done through a variety of methods, such as equity crowdfunding, private placement, or even traditional loans.

If you’re serious about starting a real estate fund, then follow these steps, and you’ll be on your way to success.

Conduct Due Diligence on Properties

Conducting due diligence on a property is important for any real estate investor, whether you’re looking to buy a fixer-upper to flip or a rental property to hold onto for the long term.

What exactly does due diligence mean, and how can you go about doing it effectively?

Let’s start with a definition: due diligence is the process of investigating a potential investment in order to make an informed decision about whether or not to proceed. This investigation can take many different forms, but some of the most important things you’ll want to look into include the property’s location, condition, and potential for return on investment.

If you’re new to real estate investing, the due diligence process can seem a bit daunting. But don’t worry – with a little time and effort, you can master it! Here are a few tips to get you started:

1. Do Your Homework on the Neighborhood.

Before you even start looking at properties, it’s important to do your research on the neighborhood or area where you’re thinking about investing.

What is the crime rate like?

What is the average rental rate for similar properties?

How is the local economy?

All of these factors can have a big impact on your ability to profit from a real estate investment, so it’s important to understand them before you move forward.

2. Get a Comprehensive Home Inspection.

Once you’ve found a property that you’re interested in, it’s time to get a thorough home inspection. This will give you a good idea of the property’s condition and any potential repairs that will need to be made.

3. Run the Numbers.

Before you make an offer on a property, it’s crucial to run the numbers to see if the deal is actually a good one. This includes calculating the estimated repair costs, anticipated rental income, and your potential return on investment.

If you’re not sure how to do this, there are plenty of helpful resources online (including our own Real Estate Investment Calculator).

4. Hire a Professional.

If you’re still feeling unsure about a particular property or investment, it’s always a good idea to hire a professional. Real estate agents, home inspectors, and even investment advisers can all provide valuable insights that can help you make the best decision for your situation.

5. Trust Your Gut.

At the end of the day, investing in real estate is a personal decision. If you’ve done your due diligence and you’re still not sure about a particular property, it’s probably best to move on. There are plenty of other opportunities out there, so don’t force yourself into an investment that doesn’t feel right.

Create a Legal Fund Structure 

If you’re thinking about starting a real estate fund, you’ll need to create a legal fund structure for it. This can seem like a daunting task, but it’s actually not too difficult. Here are a few things to keep in mind as you create your fund’s legal structure.

First, you’ll need to decide what type of entity your fund will be. There are a few different options, but the most common are Limited Liability Companies and real estate partnerships. You’ll need to choose the one that makes the most sense for your particular fund.

Next, you’ll need to draft the fund’s operating agreement. This document will outline the fund’s managers’ and sponsors’ roles and responsibilities. It will also specify how the investment funds will be operated and how profits will be distributed.

Finally, you’ll need to file the necessary paperwork with the state in which your fund will be located. This will vary depending on the type of entity you’ve chosen, but it’s generally not too complicated.

Once you’ve taken care of all the legalities, you’ll be ready to start raising money for your real estate fund. Remember to market it to potential fund sponsors and make sure they understand the risks involved. With a little bit of work, you should be able to raise the equity capital you need to get started.

Manage and Operate the Fund

To start a real estate fund, you’ll need to do some research and figure out what type of fund you want to operate. There are many different types of real estate funds, each with its own investment strategies and goals. Once you’ve decided what type of fund you want to operate, you’ll need to put together a business plan and track record. Once you’ve done all of that, you can start marketing your fund to potential investors.

Frequently Asked Questions

How much do you need to start a real estate fund?

There is no one-size-fits-all answer to this question, as the amount of money required to start a real estate fund will vary depending on the specific goals and strategies of the fund. However, in general, most real estate funds will require a minimum investment of $1 million.

How do real estate funds make money?

There are a few ways that real estate funds make money, but the most common is through fees charged to investors. These fees can be charged as a percentage of the total investment or as a flat fee. The fund may also charge performance-based fees, which are based on the return that the fund generates.

Can I start my own REIT?

Yes, you can start your own REIT, but there are a few things to keep in mind. First, you’ll need to have a solid business plan and track record as a real estate investor. Second, you’ll need to raise equity capital from investors, and third, you’ll need to comply with SEC regulations.

How do I start a small real estate investment?

There is no one-size-fits-all answer to this question, as the best way to start a real estate investment fund depends on the specific goals and objectives of the fund. However, some tips on how to get started include:1. Define the purpose of the fund. What are the goals and objectives of the fund? What type of real estate investments does it seek to make? 2. Raise capital from investors. This can be done through private placement or a public offering of securities. 3. Hire a professional management team. The team should have experience in real estate investing, asset management, and finance. 4. Create a diversified portfolio of investments. The portfolio should be diversified across asset types, geography, and risk levels in order to minimize risk and maximize returns.


If you’re looking how to start a real estate fund, there are a few things you need to do in order to succeed. First, you’ll need to find the right property or properties to invest in. You’ll also need to put together a team of experienced professionals who can help you manage and grow your investment. Finally, be sure to monitor your progress and make adjustments as needed along the way. By following these steps, you can give yourself the best chance for success when starting a real estate fund.