In a real estate offering, the Use of Proceeds section of your PPM is where you show investors exactly how their “dollars” are being allocated. Investors want to see that the bulk of the money is going into the property (the “dirt”), while you must ensure you have enough to cover the high costs of closing and due diligence.
Below is a standard 2026-style table for a Real Estate Syndication.
Sample Use of Proceeds Table
Assuming a $5,000,000 Total Equity Raise for a $15,000,000 Property Acquisition.
| Category | Estimated Amount | % of Total | Notes |
|---|---|---|---|
| Property Down Payment | $4,000,000 | 80.0% | Cash equity applied to purchase price. |
| Acquisition Fee | $150,000 | 3.0% | 1% of the $15M purchase price (paid to Sponsor). |
| Legal & Organizational | $50,000 | 1.0% | PPM drafting, SEC/State filing fees (LARA/EFD). |
| Third-Party Due Diligence | $35,000 | 0.7% | Phase I Env, Property Condition Report (PCR). |
| Loan Sourcing/Closing | $75,000 | 1.5% | Lender fees, appraisals, and legal. |
| Renovation/Capex Reserve | $500,000 | 10.0% | Immediate repairs or value-add upgrades. |
| Working Capital Reserve | $190,000 | 3.8% | Operating cushion for the first 6-12 months. |
| TOTAL PROCEEDS | $5,000,000 | 100% |
Critical Disclosures for this Table
1. The “Acquisition Fee” (Item 16 Disclosures)
On your SEC Form D, you must specifically disclose if any portion of these proceeds goes to your “Related Persons” (you and your partners). In the example above, the $150,000 Acquisition Fee must be reported in Item 16 of the EDGAR filing.
2. The “Sources” vs. “Uses” Balance
In a PPM, this table is usually accompanied by a Sources of Funds table.
- Sources: Equity Raise ($5M) + Bank Loan ($10M) = $15M Total.
- Uses: Purchase Price ($14.2M) + Fees/Reserves ($0.8M) = $15M Total.
3. Capital Reserves
Real estate investors in 2026 are particularly sensitive to “Capital Reserves.” With fluctuating interest rates and insurance costs, showing a healthy reserve (usually 3–5% of the raise) is often seen as a sign of a sophisticated and safe sponsor.
4. The “Blue Sky” Fees
Don’t forget to include the Michigan LARA/EFD fees ($260) and any other state fees in the Legal & Organizational line item. While small, they add up if you are raising money in 10+ states.
Important Reminder for Real Estate Sponsors
If you are doing a Rule 506(c) offering (General Solicitation), you must add a line item for Marketing/Advertising. Since 506(b) forbids advertising, that line would be $0, but for 506(c), it is common to see 1–2% of the raise allocated to digital ads and investor portals.
Would you like me to draft a sample “Subscription Agreement”? This is the actual contract an investor signs to commit their funds to your real estate deal.