The Commercial Real Estate Cookbook (CREC)

What I wish I had known when I started in CRE and CRE tech

I never set out to write a book.

What I did set out to do — repeatedly — was to make sense of commercial real estate. To understand why one deal sings and another flops. Why data is gold in one meeting and deadweight in the next. Why the same three acronyms can mean six different things depending on who’s saying them and how many funds they’ve raised.

This book came from the notes I kept to stay sane. The “Is this normal?” questions I’d ask my deskmates. The back-of-the-envelope math I jotted in too many notebooks. The CYA checklists I created when handed a new asset class or a new reporting deadline. At some point, I realized I’d accidentally compiled a playbook — one that deserved to be out in the open.

I’ve worn a lot of hats in CRE: analyst, tech lead, investor-whisperer, founder. I helped scale a private equity firm from $300M to $3B AUM, launched and sold a real estate software startup, and now lead strategy and insights at a proptech firm with 300+ people and some of the biggest names in real estate as customers. I’ve pitched institutional investors, demoed products, cleaned datasets, and presented in front of 1,500+ people at PREA. Sometimes in the same week.

Through all of it, I kept bumping into the same truth: real estate isn’t just about buildings. It’s about decisions — made by imperfect people, using imperfect information, under very real constraints. So this book isn’t about theory. It’s about what actually happens. What gets missed. What gets overvalued. What gets you fired. And what, if you’re paying attention, might just give you an edge.

This isn’t a textbook. It’s a cookbook.

If you’ve ever learned to code, you’ll know the format: coding cookbooks are full of tiny, functional scripts — each solving one problem, each grounded in the real-world edge cases that never show up in documentation. You don’t read them cover to cover. You flip to the part you need, figure it out, tweak it, and keep building. That’s what this book is. It’s a beat-up binder of CRE recipes: how to interpret DSCR without faking it, why you should vet a sponsor without just saying “vibes,” how to structure your fund model so that it won’t implode by year two.

And instead of printing it as a traditional book, I’m serializing it — chapter by chapter, section by section — as a series of paid Substack posts. That way I can keep it updated, keep it real, and keep adding what you actually want to learn. If you're not already subscribed, you can do that below (after a lengthy free preview) to follow along.

It’s part translation guide, part field manual, part pep talk. Because you don’t need to have a CFA or a real estate last name to be good at this. You just need to know where the landmines are — and how to build around them.

Let’s get started.

P.s. I’m not committing to a weekly cadence — because I like you, and I like being honest. I’ll publish these as they’re ready. With 50,012(!) words already drafted, it’s going to take some time to send them your way. Appreciate you sticking around.

Chapter 1: Owners and Sponsors

You may think the top of the commercial real estate food chain is the owner – the person or company who owns the property. If you come from residential real estate or you know people who own homes, this may seem super simple.

It’s not.

I remember when a good friend of mine asked me whether he should invest in an institutional wealth advisor’s real estate fund. “I’ve been wanting to invest in real estate, and my financial advisor says I can. And it’s for a super low fee!” He excitedly explained.

“That’s great,” I replied. “Why did you want to ask me about it then?”

“Well, I wanted to know if the fee structure makes sense and if I really am getting a good deal,” he said, looking both hopeful and – because he’s a smart guy who knows sales tricks – wary at the same time.

So I dug into the brochure and Private Placement Memorandum (PPM) he’d been given. It didn’t take long before I realized he was dealing with at least a double, in some cases a triple waterfall ownership structure. Certainly not the direct investor that his tone implied he wanted to be. I explained the mechanics to him, starting from the bottom of the ownership totem pole. He’s a tech founder with no real estate background, so I did my best to relate how this works in terms that anyone could understand. And that’s what I’m sharing with you now.

Common Ways to Own Commercial Real Estate

Commercial real estate deals can be structured in a variety of ways, kind of like how tech startups can be bootstrapped, funded by VCs, become publicly traded, etc. The structure matters because it determines who is in control, who puts in the money, and who gets what share of the profits. In can be as simple as the “I own a building by myself!” scenario to more complex arrangements like a fund of funds or REITs.

You may have seen the term “waterfall” – it’s not a majestic fountain in a hotel lobby, but the way profits flow to different parties in a deal. I’ll mention it a few times in talking through how these ownership structures work, and I promise I’ll come back to it in more detail later. The waterfall determines how much you’ll get paid at the end of the day. Because that’s what you want to know, right?! Okay, let’s talk through mechanics of who’s who in each type of ownership structure.

1. Direct Ownership (Solo or Sole Proprietor Ownership)

This is the simplest structure. One person or one entity owns the property outright. For example, you and your friend could form an LLC (limited liability company) and have that LLC 100% own a small office building. Or a wealthy individual might just buy a retail center in their own name or through a wholly-owned company. In direct ownership:

• There are no outside investors to answer to. The owner makes all decisions and keeps all the profits (after paying any debt, of course).

• It’s straightforward but also means the owner bears all the risk. If the property loses money, there’s no one else to share the pain.

• Many local landlords operate this way – think of someone that owns a few duplexes they AirBnB. Also, some large companies (like a corporation needing a headquarters) might prefer to buy their building directly so they have full control. These are called owner-occupiers.

• The downside is that you’re limited by how much capital and expertise you personally have. If the project is bigger than your wallet, you’ll need partners or different structures.

The two more institutional forms of direct ownership include vertically integrated firms and family offices.

Vertically Integrated Firms: Some real estate companies are “vertically integrated,” meaning they keep many roles in-house. A vertically integrated owner might have property managers, leasing brokers, construction managers, and asset managers all on their payroll instead of outsourcing. This is a bit like a tech company that does both hardware and software under one roof (think Apple). The benefit is control and potentially seamless coordination; the challenge is it’s a lot of overhead. If not vertically integrated, the direct owner will hire third-party firms for those tasks.

Family Offices: Think of a family office as a mini-institution – it’s the investment arm of a wealthy family or individual. Some are extremely sophisticated, essentially operating like venture or PE funds, but with one family’s money. Family offices might invest directly into properties, or into funds, or partner as an LP with a sponsor on a deal. They often have more flexibility than large institutions and may be open to smaller or more niche opportunities. If you come from tech, you might know that some startup founders eventually set up family offices to invest their wealth – they could end up dabbling in real estate too.

From a newbie perspective, direct ownership is conceptually easiest: you own it, it’s yours. The moment you bring in others, things get spicier – which leads us to the next structure.

2. Partnership or Joint Venture (JV)

In a joint venture, two or more parties come together to buy or develop a property and share the ownership. This is extremely common in commercial real estate because properties are expensive and often one party has something the other needs. For example:

• A local developer (not the software kind) finds a great site for a new industrial park but only has $5 million and needs $20 million in equity. They partner with a private equity real estate fund that provides the other $15 million. They form a joint venture entity (typically, an LLC) where the fund owns 75% and the developer owns 25%. The developer runs the project (as the operating partner) and the fund is the capital partner. Together, they own 100% of the equity in the project via the LLC.

• Or two companies might team up because one has specialized knowledge (say, a retail expert) and the other has capital.

In a JV, typically one partner is the General Partner (GP) or sponsor/operator and the other is the Limited Partner (LP) (the more passive investor, aka financial investor). The GP might put in a smaller share of money (often 5-20%) and the LP puts in the majority. While the sponsor takes on the most risk, they also have the highest potential for reward. Why would the LP accept that? Because the waterfall ownership structure greatly benefits sponsors if the deal goes well, but if the deal goes sideways or down, the LPs who put in the bulk of the equity investment get paid and the sponsor may not even get their money back.

Think of the sponsor as the quarterback of a real estate project. They typically find the deal, raise the money, sign the loan (usually), and quarterback the strategy from start to finish. The sponsor manages the day-to-day of the property. Note, however, that the sponsor does not necessarily run property management. That work may be contracted to a third-party management firm. In many cases, sponsors are similar to tech startup founders or corporate private equity shops, but instead of building apps or buying companies, they’re acquiring and managing buildings.

As mentioned, the deal sponsor often contributes the smallest ownership percentage. Many sponsors do not put up all of their equity money themselves; they will have investors in their portion of the equity check. These investors are often high net worth (HNW), ultra high net worth (UHNW), or family offices. We discuss the U.S. government rules around fundraising in a LOT more detail in chapter 6, both for LPs and within the sponsor’s equity. As far as how much sponsors invest in their portion of equity, that’s all over the map.

The LP, on the other hand, is happy to ride along with less work. The profits will be shared according to the partnership agreement, as described above. Like sponsors, owners also may have investors in their portion of the equity in the property. More on LPs in a later chapter.

Joint ventures can be 50/50 partnerships too, or any split really (90/10, 70/30, etc.). The most common tends to be 90/10, with the LP putting in 90% of the equity and the GP putting in the remaining 10%. These partnerships could be between individuals, companies, funds, REITs, you name it. LLCs tend to be the most common legal structure. What makes it a JV is that multiple parties share ownership and have some kind of agreement how they’ll govern the property and split the economics. Typically, a JV will have an Operating Agreement or Joint Venture Agreement that spells out each party’s rights:

• Who gets to make what decisions (maybe big decisions, like debt financing or recapitalization, require both parties’ consent, etc.).

• How and when money is distributed.

• What fees the GP might earn (sometimes the GP also takes fees for managing the project).

• And importantly, how they will eventually exit the investment (sale or buy-out provisions).

Think of a JV like a marriage. At first, you and your spouse are elated and excited, aligned on shared goals, and optimistic about the future. But if you don’t have clear agreements up front — on who makes decisions, how to handle money, or a prenup in case someone wants out — you’re setting yourself up for a messy divorce . Think of your agreement as a fire extinguisher; you hope to never use it, but boy are you glad you have it in the event of a fire drill… or when there’s actually a fire.

Let me tell you about the first fire I had to put out.