How to Make Managing Investor Funds Easier With a Fund Administrator with John Ruszkowski

We'll go up.

Welcome everyone to Syndication Attorneys' free monthly podcast where we talk about topics of interest to real estate syndicators with the opportunity for live questions and answers at the end of the call. I am attorney Kim Lisa Taylor. Before we get started, please note that all of our podcasts will be recorded and may be used for future promotion, posted on our website, or broadcast in a podcast available to the public. If you don't wish to have your voice recorded, don't raise your hand. Instead, you can put questions in the chat. We will do live Q&A at the end of the call. So you can always, if you do have a legal question you'd like to ask, you can schedule a one-on-one consultation with us at our website, syndicationattorneys.com. You'll see a tab there that you can, or a button you can push that's schedule a consult, and you'll get some options for scheduling a call with one of the attorneys or one of our staff. And we'd be always happy to talk to you. So information discussed during this free podcast is of a general educational nature and should not be construed as legal advice. Today our topic is, what is a fund administrator and why do you need one? So, you know, I guess we've got a couple of alternate topics. That was one of them. And the other is really like making managing your funds easier with a fund administrator. You know, because that's just a huge, a huge thing that people don't realize, that managing a fund is a little different than managing a syndicate. And so we've got our special guest, John Raskowski of Opus Fund Services, and he's going to tell us all about that and how his company works and, you know, what kind of services you need to make your fund management go a little more smoothly. So, John, welcome. Welcome to the show.

Thanks, Kim. Thanks for having me.

Yeah, happy to. Well, so some of you may remember that John was scheduled to come on, I think, back in April, right? And, you know, he canceled at the last minute, you know, because his wife was having a baby. So, we excused him for that. We said, that's really cool.

Listen, I tried to make it work. I tried to negotiate. And unfortunately, My wife won, as per usual.

Yeah, that's just a non-negotiable thing. So totally understand. We're excited. Congratulations on the new baby, and we're happy that you are able to come back. So tell us a little bit about yourself and Opus Fund Services.

Sure. So I've been with Opus for a little over 7 years now. I've been in the alternative investment space for the better part of about 15, 16 years of kind of zigzagging my way through different client-facing roles, business development, relationship management, did some project management, and then landed here at Opus in 2016. It's been a great ride so far. Opus, we are obviously a fund administrator. We've been around since 2008. We started out, we'll call it almost exclusively as kind of the more public securities type of administrator. But throughout the years, you know, we've morphed into more of a generalist type of role, if you will. So we've included private equity, real estate. We do some venture capital administration as well. But real estate has been, has been probably over the last like 4 or 5 years, has been a big driver of our business. So glad I'm able to join you over here today. Just in terms of our clientele, we have about 750 funds that we administer for. spread across about 500 unique investment managers. In terms of size, you know, we're pretty focused on funds that are going to be new launching. New launches are about 80% of our new revenue each year. Size-wise, you know, we're not afraid to take chances on small managers. I mean, that's kind of our bread and butter is the startup and really early-stage emerging manager space. I would say under $100 million. is probably a good fit for us. But again, not afraid to, you know, propose or partner with clients that are going to be more closer to $10, $25 million. That's really kind of what helps keep the lights on for our business.

So, so would it be fair to say that kind of a $10 million fund is maybe your, your starting point, or would you actually consider managing a fund that was smaller than that?

Yeah, we could. So we would certainly consider starting smaller. I mean, it really depends on the aspirations of the manager, you know, as long as they're willing to, you know, incur our fees, which I think are pretty reasonable. And really, look, I think most folks, you know, that's at that size, if they're looking to get a good institutional infrastructure in place, you know, an administrator is going to be a core, you know, partner in that. So really depends on what they're looking for. But certainly, yeah, we would certainly, you know, size is not a a restriction for us. It just is a matter of whether or not the manager sees, you know, an administrator as being essential to the success of their business.

Well, and it can certainly add credibility to a fund manager if they're using a fund administrator because their investors have that additional comfort level knowing, hey, this guy's not trying to go it alone and figure it out for the first time all by himself. He's got some support and some backend. So that I think is critical, especially for new fund managers, because a lot of the people that come to us, they're immersed in real estate, they're real estate investors, and they need money to be able to do their real estate investments, but they aren't really willing to make or willing or able to make the transition to being a fund manager, which by itself could be a full-time job because they still want to do the real estate. So having a service like yours could be a tremendous boost to somebody who is focused on the real estate, needs the money, wants to do the fund, thinks they can raise the money, But they just don't have the time to sit and do all the administrative work behind running a fund, which is a lot more than, say, doing a syndication where you've got, you know, one project, you're only trying to manage one project and the income from that and dispersing the income from that. With a fund, you've got multiple projects. So maybe let's just back up again a little bit and explain for some of the people that are on this call what we're talking about are blind pool funds. Right, where you're going to be raising some pool of money and going to be buying multiple projects. And so you've got to have a way to consolidate all of the earnings from those projects and to reconcile all of that so that you know, you know, what to withhold in reserves, what to disburse to your investors, and then making sure that they have all of the appropriate tax documents and supporting documentation to to support those distributions. Is that the correct characterization, John?

Correct. Yeah, I mean, and I can probably— I'll break it down into a few different buckets of what we do as a fund administrator. I mean, first and foremost, they're probably what most folks know an administrator for is acting as the independent books and records. All right, most folks, you know, may not be equipped, may not have an internal accounting team, so you outsource that role to to someone like Opus. You know, we have no skin in the game. There's no conflict of interest, which is really nice. And again, going back to that independence factor, that, that's probably first and foremost why most folks would want to bring an administrator on to give peace of mind to their investors, just knowing that there's no potential shady activity or cooking of the books behind the scenes. You know, we have, we have no, you know, no association with our clients. So from our standpoint, we can afford to be completely independent. But from a high level, we would act as the books and records. You know, we do— you know, our main role is to strike what's referred to as the net asset value on a, you know, typically monthly or quarterly basis. We're also going to be— just to back up, the NAV is going to be kind of a full set of financials that include like the balance sheet for the fund, the income statements, the allocation schedule is going to be partnership accounting. And then we'd also do the— a set of portfolio reports as well. So you'd be able to see all that information in kind of a single NatPAC. We also distribute investor statements out to LPs as well. So again, they're going to be getting that, you know, independent updated balance information, performance information, all that's going to be included as the deliverable to them. So that's really from a reporting standpoint what, you know, our clients and their investors are going to be getting. Probably in kind of the second bucket I'll talk about is the investor services. You know, we're typically the outsourced investor services team for our clients. We're going to be handling all the investor-level transactions that are occurring within the fund. So we'll think about like the initial investor subscriptions. When those come in, we're going to be essentially processing the sub-docs. We're going to be onboarding the investors and getting them set up in our system. We do the KYC and the AML checks as well. So KYC just being know your client checks to make sure that there's no red flags in their background that could potentially disqualify them from being part of the fund. On the AML side, we're going to be confirming who's the beneficial owner of the incoming capital, confirming that it's coming from a regulated financial institution. Ongoing within the fund, we're also going to be helping with capital calls if those are applicable. So if managers are going to be periodically calling capital, as you know, different opportunities come up, we're going to be the team that, that's typically allocating that capital. We're going to be sending capital call schedules to our clients. They'll confirm them. Confirm the balances, and then from there we would create the, the capital call notices and distribute them to our investors. Similarly with the distributions as well. So there's going to be distributions that are paid periodically. We're going to be handling the processing of those as well. Everything from kind of soup to nuts, you know, allocating the balances, pushing out the notices, and then also helping assist with the bank to push those transactions back out to investors. So that kind of covers the investor services side. Third bucket I'll talk about is just on the banking. We, we help with, with the banking activities with our clients as well. So daily cash reconciliations, we're going to make sure we account for all the activity with the fund. And then we're also going to be helping with wire processing as well. So we have a unique control in place where Opus would act as a second reviewer and approver of all outgoing movement of money from the fund bank account. And again, this goes back to providing confidence and peace of mind to your investors. So any sort of outward movements of money from the fund bank account is going to go through our banking team, and we're going to be kind of essentially reviewing it and signing off on it, you know, with asking for support or some sort of supporting documentation that gives credence to that wire. So basically, it restricts any one of our clients from, you know, potentially taking investor capital and using it for unauthorized purposes. Knock on wood, we've never had anybody try that. So that's a good thing. But yeah, you know, it's just again, it's one of those risk controls that we have in place to just make sure that everything is operating properly within the fund. And then the last thing I'll mention is just the audit and tax support at the end of the year. We're going to be preparing what are referred to as the year-end financials, and then we're going to hand those off to whoever the auditor is, if there is one, and then we provide any sort of audit support along the way. So these are just a few of the kind of main responsibilities that we play. There's obviously more nuanced things kind of in between, but at a high level, I think this covers most of where we typically fall in place from a responsibility standpoint.

So if I'm a fund manager listening to this right now, I'm like, you're hired, right?

I hope.

That stuff. And it's like, oh, I had no idea I had to do all that stuff. Now that I know that that stuff can be done For me, I'm just gonna hire them to do it.

You know, well, let me, let me, I'll just, I'll just, let me, let me just comment on that. I mean, look, it, it really is a partnership. Like most folks, sometimes we get that, get clients that think, okay, I hired a fund administrator, I could wipe my hands clean of all that stuff and they're gonna do it. It really is a partnership. I always say, you know, we're, we're, we're not a service provider, we're a service partner because we really become an extension of that internal team. the internal teams of our clients. So we can't just, you know, blindly confirm stuff and approve stuff. We do need collaboration with our clients in order to provide a certain, you know, level of input information. We need certain sign-offs. So there is certainly collaboration between the teams on a day-to-day basis. But we are kind of the final— we're in a lot of instances preparing and, you know, acting as the final sign-off on stuff. So You know, I wish I could say, you know, you just hire somebody and you set and forget it or hire an administrator, but there is gonna be a lot of ongoing communication back and forth.

Well, and it's the same with our services. You know, when somebody hires syndication attorneys to draft their offering documents, it's a very interactive process. And, you know, occasionally we have a client that's like, hey, I hired you, why do I have to read these documents? It's like, well, because your investors are gonna be looking at them and they're gonna ask you questions. And if you don't know the answers, they're not gonna invest with you. And, you know, so, You know, we do require our clients to review and provide input, make sure their documents are 100% correct.

Mm-hmm.

Just like, you know, you guys need input. You need to have the input from your clients to make sure that, you know, what you're doing is right. Or if you see something that you're questioning, they can confirm what it was for or what it was about. So that's important. And I think you also mentioned to me earlier when we were talking about this that you also pay vendors, right? And so if somebody— if you have to pay somebody, For something, you guys can do that.

Yeah, exactly. So typically our process, and sometimes it deviates from administrator to administrator, but from our standpoint, you know, our clients will just kind of provide the inputs within our client portal. So they'll go in and they'll make the initial request. They'll say basically, you know, who it's going to, what's the amount, what date you want it they want the transaction booked as, and then, you know, they provide— they upload some sort of supporting documentation. So they do that within our portal. That's obviously— that's not the final end-all be-all. They essentially prepare it, and then from there it goes to our banking team. We review and essentially approve it after we reconcile the support with the request. And then from there we would actually go into the banking portal, whoever the bank is, and we would, we would kind of set that all up. So we would be the ones that would be setting it up, but it would essentially be initiated by our clients within our client portal.

Well, it's a tremendous amount of services, and I know you told me earlier, well, when our— in our previous conversations, what your service rates were, which are really, really reasonable. We'll get to that in a little bit. But see, so you have this, your digital subscription tool. Tell us about that. What is that?

Yeah, so, so one of the things that's quite unique about Opus is we are— I mean, if you ask probably our founders, we're as much a technology company as we are an administrator. We operate under proprietary technology models. So even when I say, you know, we're kind of forward-looking on technology, it's not just like a buzzword. We actually put our money where our mouth is. So we have full-time teams that, that act in our IT and innovation. And also we have our full-time cybersecurity team in-house as well. So we don't outsource that. None of our technology. We're not, we're not white labeling it. We're not, you know, purchasing it from a separate vendor. You know, I think the obstacle with that is you're kind of beholden to, you know, what they tell you you can and can't do. That's something that we never really wanted. We always wanted to be as flexible and as customizable as possible. So So it's proprietary model. You know, all of our systems have been pretty much built and maintained over the course of the life of Opus. Everything from, you know, we have our client portal that I mentioned. That's going to be the portal that our clients have access to, where we're communicating different levels of sensitive information and kind of updated transaction activity. It's really, again, where we're speaking together, you know, between us and our clients. We have an investor portal as well, and that's going to be for obviously the LPs. Once they get onboarded, after they subscribe to the fund, they're going to get access to that via username and password. That's where we're going to be uploading or distributing any sort of sensitive information to them. So just think brand new investors, new investor statements, updated capital account balance information, K-1s at the end of the year, tax docs. Capital call notices, distribution notices, those are all going to be uploaded there. It's much safer, more secure than doing kind of the old-fashioned email route. So I bring that up because, you know, our digital subscription tool is quite a unique tool that we rolled out about a little over a year ago. You know, one of the things that we always heard from clients, you know, and we're constantly asking them, hey, you know, what are we doing good? What aren't we doing good? What do you guys wish you had access to? You know, one of the things we kept hearing is, hey, is there a way to streamline the investor subscription process. It's always been very bulky and paper-heavy. And honestly, from our standpoint, probably about 50% of the subscription documents that we receive have to get kicked back out to our clients who then have to manage some remediation work because they were either filled out, you know, incorrectly, or there was, you know, there was items that were left blank. It's a very confusing process. So what we've done, we basically created a universal template, and it's not meant to replace what the lawyers are doing, right? You're always going to have your investors that feel more comfortable, you know, doing it the more paper, you know, the more the paper route, paper subscriptions, especially institutional investors. You know, they're typically going to do it the more traditional route. But for high net worth individuals, a lot of them have adapted our digital subscription tool as their kind of de facto way of allowing their investors to subscribe. So what does it actually— we, you know, when we created it, we created— we used smart technology within it, embedded within it. So what it does is actually takes the answers that an incoming subscriber has input previously in the document, and it understands. It takes that and basically leads them down a certain path of questions that are only applicable to them, right? So there's less confusion like, does this apply to me? Does it not? And just as a very simple example, you know, when it comes to the portion where you're asked, are you investing as an individual or investing as an entity such as like a trust or an— or like an LLC, you know, depending on what you check there, there's going to be, you know, certain questions that are applicable to whether, you know, an individual or we'll call it like an LLC just based on that. Once they click a certain button, the system understands, okay, this is an individual. So I'm only going to show them questions that apply to an individual and exclude everything else. So what it does is it gets rid of all the noise that would normally confuse or cause issues for an investor, and it keeps it very simplified and a very narrow path for them to complete the subscription. So it's been a real game changer. Obviously, some lawyers have a little bit of an issue. They want to at least review kind of the language that we're presenting. But most folks, again, kind of the secret or the not so secret thing about subscription documents are they are pretty much general across most law firms that, you know, some language could be, you know, customized or tweaked, you know, across firm to firm. But for the most part, there's the same general investment questionnaire. It's the same, you know, questions that are presented to investors. So, you know, based on that, in collaboration with some other lawyers, we felt comfortable that we weren't stepping on too many toes by implementing something like this. And what's nice about our tool is that because we're not licensing it or white labeling it from a separate firm, You know, there's no fees for us to pay somebody else. So we've actually offered it as a, as kind of a basic part of our offering. So there's no extra fees if our clients decide to utilize it with their investors. It basically makes our life more easy and more efficient, and it does the same for investors and our clients. So we're happy to offer it as just a core part of our offering.

Yeah, I'm all for anything that makes it easier for investors. You know, I've invested in People's descriptions before I filled them out. And it's, you know, can often be confusing. And I know that ours can be, you know, a little overwhelming for people at times because you do have to, if you're creating an attorney creating one, you've got to kind of, you know, cover all the possibilities. And it's like, okay, are you this or are you that? And like you said, if you can start to carve people off, if you're accredited, answer these questions. If you're not accredited, answer these questions. or, you know, whatever is applicable and making sure, I guess, with your 506 offerings that people are actually providing the verification that they are required to provide to make sure that they are indeed accredited. Is that something that you guys would also review?

Yeah, exactly. And let me just— let me mention one other thing. So I mentioned that, you know, with the paper documents, typically the remediation rate was about 50% of subdocs. Like once we implemented this, digital subscription tool, it's pretty much taken that almost down to zero because everything has to be, you know, filled out correctly, right? You can't move with an electronic version. You can't just skim over something. You know, there's certain required fields. And also another cool thing is that we require all of like the KYC docs. Any documentation has to be attached to the template when they're filling it out. So you're not getting a paper subscription document without any like, you know, driver's license or passport or other required documents. You're not getting one and then, you know, the other stuff is being excluded where you have to go chase for it. We're getting everything all at once from our— from the incoming investors. So again, that's helped to, to basically, you know, remove the need to go out and chase investors for stuff. But to your point about the accreditation verification, we do have— we have included a section within the digital subscription template where if it's a 506 or some other structure that requires, you know, investor accreditation, verification, we can certainly enable that. So that's going to be a question that would be presented when it's a 506 structure. And so, you know, the investor would go through, they would attach, you know, certain documents. So something along the lines of— and we lay it out pretty clearly, you know, what's acceptable, you know, bank account docs, tax docs, or what most folks choose to upload has actually coincidentally been an attestation letter. you know, I guess less eyes on their personal information is better. So we do accept if there's like a wealth advisor or some sort of like tax, you know, individual who can attest to the fact that they're an accredited investor, we would accept that as proof of that attestation. So yeah, so that we can certainly handle that requirement as well.

Excellent. And then what about, do you guys do any kind of background checks on the people that are administering or the fund managers?

Sure. Yeah, we, we, so just as part of our onboarding process, just like we're going to be doing KYC checks on the incoming investors, we, we also want to know that, you know, just like our clients are vetting us, you know, against other administrators, we want to make sure that we know who our clients are as well. So we would do, you know, KYC checks and background checks on the, the principals and partners of the funds that we're going to be partnering with.

Yeah, and we do those also. And I don't know how many other law firms do, but we just make it a requirement for all of our clients that want to bring in other people into their management team that they all have to undergo that. And we feel like it's a service to our actual clients because you don't necessarily know the other people that are coming into your deal. You might have met them at a conference and they're going to help administer your syndicate or your fund and maybe bring some investors and do some other jobs, but you don't necessarily know their background. And so if we impose that requirement on all of our incoming clients and all the other people on their management team, it causes people who aren't qualified or who maybe have some of those negative things in their background to say, yeah, never mind, I'm not going to do it. And then that kind of helps protect the other people in management. So I think that's really a basic requirement. And, you know, It's for us, it's a necessary component of being a part of a fund or a syndicate management team. So do you guys have any clients, do you know, that are doing just syndicates and using your services, or all the people that come to you typically doing larger fund where they're going to be buying multiple properties?

Yeah, so it's an interesting question. We have been asked that before. I'm actually in the process of working through that right now where there's no commingled investor fund. They're still at a phase where they're trying to build a track record so they can go out and raise a fund at some point. But, you know, it's a small team and they're like, look, we don't have the bandwidth to be handling all these middle and back office stuff. So, you know, we're working on it. I think we would certainly consider it as long as Again, it ultimately comes down to, you know, fees, right?

Right.

As long as you got— as long as they're willing to shoulder some fees, the fees that we— because again, ultimately, we can't work for free, unfortunately. In order to keep, you know, qualified and really valuable personnel, we got to make sure that, you know, that we're— that, you know, that we can kind of keep the lights on and keep our best, you know, human capital in place. But the long and short, we would certainly consider it. We would certainly consider that.

Yeah. Why are the net asset value evaluations important?

Yeah, so the net asset value is really, I mean, that's going to be an indication of kind of like the, you know, the growth of the fund, you know, the size of the fund. It's also where, you know, investors' P&L allocations are going to be derived from. So the net asset value is basically a combination of the P&L from the fund. And then also we take into account, you know, any sort of expenses that were incurred by the fund as well. So for those that aren't familiar, you know, it's usually written up in the PPM, you know, what fund expenses can be expensed back to investors. And those are typically things like, you know, legal fees, administration fees, you know, some tax and audit work. So ultimately, when we're doing the— it's basically a roll-up of all the P&L that's been derived from the fund. We then, after, after our portfolio accounting team does their work, you know, our fund accounting team will look at the bank statements, say, okay, here's different fees that we, you know, we need to pull out of like that, you know, out of the, the final balance number. And then from there, we're going to allocate the, the P&L across investors. So they would get their statements that are essentially going to show their, you know, their net returns for that period. You know, there is a difference between like the gross and the net. The gross performance is going to be the performance before fees, and then You know, the net's going to be everything like net of fees. So it's important because again, that's going to be, you know, it's going to show the management company essentially, you know, how, you know, how their fund is performing, you know, how much it's grown from past periods. So yeah.

And do you actually, as part of the NAV, actually look down at the asset level to see what the value of these different assets are that the fund owns?

Yeah, so we do. So all of our clients receive a set of portfolio reports. So, you know, it's going to kind of just give updates on, you know, what the cost basis is, you know, what the current market value is of assets, any sort of realized or unrealized gains. That's going to all be included in that report. You know, I will, I will note we're not a valuation firm. So, you know, when there's like level 2 or 3 assets that aren't publicly able to be priced, you know, we are typically working with either the manager or a separate third party like an appraisal firm or evaluation firm to get some sort of guidance on that. You know, for smaller funds, you know, maybe you can't, you know, afford to go out and, you know, hire a third party 'cause it does get expensive.

Sure.

But, you know, in those instances, the manager, you know, we ask all of our clients to have some sort of pricing policy or pricing methodology in place. So in those instances, you know, we would ask the manager to, you know, to maybe provide some guidance And again, maybe it's based on like comparative properties or some sort of internal methodology. But, you know, we're not just checking the box, right? You can't give us a pencil and say this pencil is worth $1 million, you know, and we're like, okay, no, we're going to take a look at your pricing methodology and say, okay, you're determining that the markups or markdowns on this asset is X, and we're going to look back at the pricing policy and make sure that, you know, that kind of fits the bill there. Yeah, I will also mention that, you know, the teams that they would be working with here at Opus, we, you know, aside from the technology that I mentioned earlier, you know, we kind of have a 2-pronged approach. We have the technology, and we also have, you know, human capital here that our team, that our clients would be working with. So every client's going to be allocated a small dedicated team, which really is going to consist of a day-to-day point person in the form of a client relationship manager. And then we're also going to have a dedicated accounting team as well. So when these conversations come up around, you know, valuation and stuff like that, we're like, you know, we're getting to the end of the quarter. We want to know, okay, for accounting purposes, is there anything that needs to be updated from an evaluation standpoint? We're going to have like direct teams that will be working, that will be reaching out and working with our clients on this. So it's not— you know, I want everyone to think that it's simply, you know, a relationship that's managed over, you know, a computer. Now you would have actual dedicated team members that are all locally based here. who would be working with you on a regular basis as well.

So I'm sure you guys are familiar with the Corporate Transparency Act that's coming into effect January 1st, 2024. Is that a service that you guys are going to be able to help provide, is to provide those reports to Financial Crimes Enforcement Network that are going to be required under that?

I think, if I recall, I want to say that the custodian is going to be most involved in that. If I recall, I got to check with my team. I don't know where we are with that. But from what I understand, I think when we first discussed it, I thought that it was going to be more of a custodian that was going to have to be in place for some, you know, not just, you know, you know, publicly listed securities, but also for some of these closed-ended, like, uh, illiquid asset funds as well. Um, I'm not quite sure on that. That's something that I probably have to take back to my team and double-check.

Okay. Yeah, it's just, you know, we've all got to be aware of it. It's coming, um, and it's going to require— there's some articles about that on our website. Also, if you guys don't have my book, uh, How to Raise Capital for Real Estate Legally, uh, it's available on Amazon. Uh, if you or you can get a copy of it on our website. But either way, you want to make sure that you read that chapter on the Corporate Transparency Act because it's going to apply to every single entity that you own. And all people in management, plus anybody that has over 25% of the ownership interest in any entity that you have, are going to have to be reported. And that's for existing entities as well as new entities. For existing entities, you're going to have to— you have a year to report. And for new entities, you have to report within 30 days. And that's going to become a challenge for some of our syndication clients because they may form their entity and not close on a deal for 90 days. And so in that time span, they've got a couple of 30-day periods that they're going to have to continue to update FinCEN. So it's going to be a little bit of a challenge. So we've got to be careful about when people are admitting members and things like that. But that's a topic for another day. And we actually did a podcast about that before. So if you're interested, You can listen to that or you can read the chapter in my book about it. Okay, well, let's see. So one other question that I had for you. Let's see. So I think we kind of talked about this during your last response was, what is the difference between an investor management platform and a fund administrator?

Yeah, I mean, I think with an investor, man, and maybe that's a little bit of a broad term, but to me, I mean, there are firms out there that really just handle kind of the investor experience side of things, right? Investor management, I think, would be kind of more handling, you know, or just having like an investor portal, right, where investors can log in and pull that information. I mean, we certainly have that. I mean, we're probably, you know, you could probably look at us as a combination of an investor management platform plus a fund, you know, administrator fund management platform. So difference being that I think, you know, we know firms that are doing just the investor management platforms, they really only handle the investor side of things. You know, there's obviously no administration in place. You're basically giving your investors a place to log into. And again, some of them have, you know, digital subscription, you know, options. You know, they handle, you know, distribution. team up distributions, and then also give investors kind of a cool user experience to be able to, you know, pull account balances and maybe see, you know, you know, what portfolio, what assets are being held in the portfolio. So we handle most— I mean, we can handle most of those things as well in our portal. But main differences being that we're going to be also the ones that are working directly with the management company and handling the administration of the fund assets.

Yeah, and I do think that is the primary distinction, is that you've talked about all these different things in the beginning of this call of, you know, what you guys are going to provide, and you're not going to get all of that out of just an investor management platform because you don't have that human capital component. You don't have a person assigned to you that's helping to upload this information.

Yeah.

You know, you're feeding— instead, you are the fund administrator. You are the one that's putting the information into the portal. And you're having to figure all that stuff out for yourself. So, you know, the investor—

Yeah. So what's interesting is they need— I mean, fortunately, like if it's a fund, I mean, they can be in place as the investor management platform, but they also then need to have a fund administrator in place. Right. So they kind of need us in collaboration with what they're doing. I mean, it's not really the case vice versa, you know, I mean, we can kind of handle both sides of it. So yeah, I would say, you know, we can kind of COVID everything from soup to nuts on the administration side.

Well, and I know that someone's going to ask this question, so I'm going to ask it for you. And I think I already know the answer is that if somebody were to hire you as their fund administrator, you would want them to use your technology platform. You're not going to act as a fund administrator for somebody else's investor management platform, are you?

No. So no, we wouldn't. I mean, you know, we, we pretty— there's a lot of overlap between like what we personally do as kind of a fully integrated solution versus it's a little bit more of a, you know, a niche that, that, that somebody on the investor management side would have. So yeah, I mean, there's overlap, but I think it becomes a bit confusing if you have, you know, us and them in place. You know, we would not— people— and we get this question all the time because folks will have certain usual suspects who I probably won't name who have them in place and they say, hey, but I need a fund administrator as well. You know, can you guys manage our investor management platform? And the answer is no. I mean, because we have all the tools that they offer and it makes it a lot more efficient just to have it under one kind of one roof, if you will. We're unfortunately, when we're producing different documents like investor statements or capital call notices, distribution notices, We're not going to log into another competitor's, you know, portal and maintain and manage that. Just doesn't make sense. So if somebody is, you know, emphatic about having, you know, their current provider and then also have Opus, we would then funnel any information through the manager who would then have to figure out how to map it to the investor management platform, the separate investor management platform. So it does become kind of takes the whole benefit of having a fully integrated fund administrator kind of removes that because it then becomes a manual effort from our client standpoint to keep both, kind of both us and the other portal updated. So certainly not something that I would recommend.

Yeah, and I completely concur with you because we feel the same way about reviewing other people's documents. It's like we know what's in our documents, our documents continually evolve. They have continuously evolved over all the years that I've been working in syndication space. And for us to try to figure out whether somebody else's docs have the provisions that we've inserted into our documents for specific protections for investors and for our clients based on the real experiences that our clients have had, it just takes longer. So the answer when somebody asks us to do that is usually, yeah, sure, we can do that, but it's going to cost more than just having us draft your docs. Yes, exactly.

And, and we don't— I mean, look, ultimately you want to, you want to keep things as, as kind of neat and tidy and efficient as possible. So I don't know, it seems like it's a little bit counterintuitive to, you know, from my standpoint, to basically have 2 different systems that you're working off of. It's much easier to have just one single system and have, you know, kind of every— all the, you know, all the systems speaking to one another.

Yeah, and I, I completely agree with you. You know, once you, you, you either decide you want the full service and you're going to embrace that, or you decide you want to do it yourself and then you are the fund administrator. That's typically what happens. So if you've got a lot of deals flow and you've got a lot of investors to talk to and you don't want to spend a bunch of time in an office uploading your stuff, then fund administrator is the way to go and just let them handle all of it. Because even if you have an investor management platform, there's certainly a place for them in the market and for syndicators that are doing one-off deals, maybe that's their best solution, but you've still got to have somebody dedicated to uploading information on a regular basis and maintaining that information and figuring it out. So, you know, you almost have to hire somebody that that's their job. Yeah.

All right. And that's when I come up against it. That's when I come up against it the most is that people, you know, when they get into this business, they have this, you know, this management system in place for these, you know, deal-to-deal syndicate, you know, deals. And then, you know, And it's great for that, don't get me wrong. But then when it comes time to, you know, launch a fund, they're still kind of beholden to that system. They're like, well, we want a fund administrator, but we also want, you know, to keep using the system because this is what our investors are familiar with and blah, blah, blah. And, you know, it sometimes becomes a tough sell. I get it from their standpoint, but, you know, sometimes you just got to adopt, you know, as you're looking to kind of scale up the business.

Absolutely. Yeah, it's kind of, you know, like you know, doing your own oil change and taking your car to get your oil changes done. At some point you decide that your time is better spent doing other things and hire experts to do the work that they're really good at. And, you know, if you review the list of all the different services that you provide, that's a tremendous amount of services that you get from using a fund administrator that you're not going to get just trying to do it on your own. So I do think, you know, that it's— when you're trying to scale up and do a fund, you kind of have to, you know, just pull up your pants and go, okay, we're going to do this. We're going to do it all the way. We're going to hire the right people to handle it for us. And that's going to help us, you know, scale up better. We're not going to spend a lot— waste a lot of time trying to figure it out. And our investors are going to really appreciate it. And they're going to understand that we mean business, you know. So that's— and when you come up—

I mean, look, I was gonna say, I mean, you know as well as I do, not everybody's equipped, right, to handle, you know, all these, these, these things that I mentioned that we do as an administrator. I think what I find most often is, you know, most, most managers want to— they're good at a few things, right? And you should kind of stay in your lane from a skill set standpoint. Most folks are great at managing a portfolio, vetting new opportunities, and really raising capital from their, you know, their investor, their circle of investors. Like everything else in between, you know, you can't, you can't make believe that you're good at, you know, accounting or doing KYC checks or audit support and stuff like that. So, you know, what I always tell folks is like, look, focus on what you do best and then outsource the rest, you know, you know, to somebody who's— this is our, this is our specialty skill set. I mean, this is what we do for hundreds upon hundreds upon hundreds of clients. And, you know, ultimately it turns out to be a good decision from their standpoint. I mean, Even if you decide to hire somebody full-time to do administration internally, you're gonna have to pay them at a minimum a 6-figure salary. I mean, we can do it for a fraction of that while also maintaining that independence factor that we talked about earlier. So, uh, no-brainer.

Yeah.

All right.

So, um, are you comfortable talking about costs, you know, for typical costs that somebody could anticipate if they're gonna hire you guys, or is it gonna be case by case? Or based on the amount of money that they're raising? How do your fee structures work?

Yeah, yeah. I mean, it's certainly, you know, we price each engagement individually, but I mean, just from like a general standpoint, I'm happy to just throw some pricing out there. I mean, we do our pricing structures based on a flat fee, but based on the kind of the size of the funds, right? So as an example, we would bucket out in our proposals various, you know, AUM tiers. You know, we'll stay like, you know, initial ones, 0 to 25, million, you know, thereafter $25,000 to— we could do $50,000 or $75,000. We can get creative. Basically, the idea is that to give transparency to our clients, right? To know, to be able to anticipate what their administration fees are going to be on a period-to-period basis. Like, you don't want to be getting, you know, variable invoices every period and be wondering, well, what is, you know, why is it higher or lower from last period and this and that? So we do the flat fees. It also gives nice runways for managers to be able to scale up their business without automatically getting hit over the head with new fees. So I think it's a win-win, especially that since most of our clients are of the nature of like new launches, obviously costs are going to be top of mind. Budget is obviously a big thing to take into consideration. For that $0 to $25 million tier, we typically start at about $1,500 per month for that. So again, a small fund, if you're launching maybe a proof of concept.

That is incredibly reasonable. You know, when you compare that to an investor management platform that you have to manage everything, versus what you guys are charging, it's a small difference and you end up getting so much more with a fund administrator. So, you know, hey everybody, audience, if you're going to do a fund, do it right. You got a lot of jobs to do with your fund, the biggest of which is marketing your fund and getting people to invest with you. It's going to consume a lot, a lot of your time. And you're also going to have to be finding assets and doing all the due diligence and everything that's involved with that. So, you know, make your life simpler if you're going to do a fund, you know, just hire a fund administrator just to keep everything straight so you don't go crazy. You know, that's just kind of my thoughts on it based on this call with you, John. I'm blown away by the amount of stuff that you guys do, and I really think it could be a tremendous benefit for people that are kind of going from syndication into a fund. They're uncertain, you know, how to administer a fund. You know, this seems like a pretty no-brainer solution.

Yeah, it is. I mean, even after 7 years, I'm still blown away that we, uh, we still offer all that. I mean, between the, you know, I mentioned the technology side of things. I mean, just even the, you know, the digital subscription option, right? I mean, if you were to try and white label something from, uh, you know, another technology provider, that alone could be probably $20,000, $25,000 a year, right? So I mean, you know, with our solution, you're getting kind of the technology all rolled in. You get, you know, the, uh, the hands-on approach from the teams that will be working directly with you, you know, and you get a good institutional, you know, administrative name. Uh, and you can go out to your investors and say, hey, look, we're serious about, you know, what we're doing, right? You know, we're taking the time to put the right infrastructure in place. We have all of our i's dotted, our t's crossed. Um, so it's a no-brainer. I mean, and look, I was still— I will say with that $1,500, there are certain potential cost drivers, right? Depending on like the, you know, the volume of like capital calls and distributions. You know, that's something that would, that would be kind of separate from the base fee. But again, that's all on a case-by-case basis. There's a difference in an engagement where there's 5 investors and then there's 50 investors or 500 investors. So we have to take that into account. But I would say for, again, a small, you know, early-stage manager, you know, under $25 million, maybe doing like a proof of concept fund or maybe, you know, First institutional funds, you know, you're probably looking at somewhere in the, you know, between $20,000 and $30,000 per year all in.

Well, that's fantastic. How can— well, before we give out your contact information, I just want everybody to know if you have a question for me or for John, we've got a couple of them where somebody's raised their hand. We've got a few that have typed into the Q&A. You can do that now. John, How can people reach you if they want to know more or they want to engage you?

Yeah, so you can reach out to me directly. I help lead the business development effort here at Opus. So any sort of inquiries are going to be funneled through myself anyways. So you can reach me, it'd be my first initial and then last name at opusfundservices.com. And that's J as in John, R as in Robert, U, S as in Sam, Z as in zebra, K-O-W-S-K-I, @opusfundservices.com. And you can tell that I have experience spelling my, my name phonetically, um, because I've had to do it my entire life.

Right, right, right. Okay, I just put that in chat.

And check out the— check out the Opus website as well. Um, there's some good information over there. We have a digital library, um, that, you know, that You know, folks can, can access, and you can see kind of small highlight videos from some of our technology capabilities as well. So it's a lot of, a lot of nice, nice resources there.

Excellent. All right, let's get to Q&A. So, Tariq, you had a question for us. Can you unmute yourself?

Hi, Tariq.

Yes, hi. I, I just want to see if this ground-up multifamily project, they do the funding for real estate. Is that something that John and his group look at? You know, we're going to go to— They don't, they don't do the funding for you. You have to go out and raise your own money.

Right?

Is that your question?

Yeah, yeah.

Do they administer the funding after we raise the money? Yes, they can. He said they're looking into doing single project fund administration. So you might want to just have a conversation with him about that and see what they could offer if you're doing it for a single development project. What I think their forte is, is helping people with funds like blind pool funds that are buying multiple projects. And yeah, so—

And we can do— and also, I mean, Kim, we do— we could do single asset SBBs as well. I mean, we do. I've actually proposed on a few recently where, you know, it's just one— there's one, you know, you know, one opportunity, one project. So it's just going to be a single asset, maybe a handful of investors. It's pretty simple to do. And, you know, we would probably propose on a fee that's even less than that $1,500. you know, being that it's a little bit scaled down from a full commingled fund. So yeah, absolutely, we take a look at that.

Excellent. Okay, we've got a couple of other questions. Yep. Um, I think we've answered your other questions, Tariq. Um, if nobody else has any questions, we'll go ahead and wrap up. Um, John, it's been a pleasure. I've learned a ton. I love to do these podcasts. This is how I started doing podcasts because I wanted to learn about all these other services that were available. And I realized it was something that was of value to our listeners and our potential clients and current clients to understand all these different services available to them as they scale their syndication and fund businesses. So we're happy to know you and happy to be able to refer people to you. And is there anything else you'd want to say that you think we didn't cover?

I think this was great. I mean, thanks again. I think the fact that you offer this out to your clientele and just even just, you know, individuals, I think it's fantastic because look, there's a lot of education that has to be had out there. And I actually spend a lot of time on my calls, you know, not only being the fund administrator, but also just kind of advising folks on best practices. So I think what you're doing here is fantastic. So appreciate you, and thanks so much for having me on here, and I look forward to continuing to support, you know, yourself and your clients as opportunities come around. Very good.

All right. Well, thank you everybody for joining us today, and reach out to John if you have any questions about fund administration or maybe even single project administration. We are happy to know him and happy to be able to refer people to him because it seems like they are the specialists in this field. And, you know, we can all benefit from learning to hire the right specialists to do the right jobs. All right. Thank you, everyone. If you want to know more about us or schedule a call with us, please go to syndicationattorneys.com. Please visit our free resources library where you can get a free book. You can read all of our articles, review our frequently asked questions. Also, don't forget about our podcast, Raise Private Money Legally. So it's available on 20 different podcast platforms. And if you don't have this new book and you would like us to mail you a free copy, you can text the word syndicate to our phone number, which is 844-796-3428. So text the word syndicate to 844-796-3428. We'd be happy to mail you a physical copy of our latest book, How to Raise Capital for Real Estate Legally. It's gotten a lot of good reviews. This one's a little thicker than the first book. Some of you that read the first book, this is a little heavier reading, but it's a lot more in-depth. All right, we'll see you guys all next time. John, thanks so much. Everybody have a great day.

Thanks so much.