Fund Administration for Private Mortgage Fund Managers

Fund administration refers to the execution of back-office duties including financial reporting, fund accounting, investor communications, net asset value calculation, distributions, capital calls, and other functions required to support a mortgage fund manager.

Since there are a lot of tasks involved, it is common for managers to outsource some of these activities to an external specialist. There are many companies offering such services. They’re called fund administrators and some come with years of experience in the private mortgage industry.

What Does a Fund Administrator Do?

Since investors’ money is used, mortgage funds are considered ‘securities’ and need to be taken special care of. Most managers hire a fund administration company to keep the accounting and compliance in order.

Here are some of the services a fund administration company offers:

• Fee Calculations and Allocation
• Payment of all Fund Expenses
• Calculate IRRs and Performance Metrics
• GAAP
• Financial Statement Preparation
• Track Portfolio Detail
• Property Accounting
• Loan Accounting
• Construction
• Accounts Receivable
• Organization Chart Creation
• Accounts Payable
• Bank Reconciliations
• Term Sheets
• Weekly Meetings

Fund administration mainly includes accounting. The job of a fund manager is to audit reports and ensure everything is correct. However, some fund managing companies offer additional services including bookkeeping, investor reporting, and taxes.

Is Ease The Only Perk of Working With a Fund Administration Company

While easy is a major benefit, it is not the only perk. Working with a qualified fund manager comes with additional benefits such as a reduced risk of compliance issues, faster problem solving, a happier staff, and more stability. In addition to this, outsourcing such tasks can also prove to be more affordable in the long-run.

Hiring an employee to take care of these tasks in-house can prove to be more costly, especially if you find a skilled employee. Plus, you may even have to invest in software and equipment. Working with a professional company allows businesses to save money and only pay for the services that they need.

What Kind of Services Do I Need?

You may not need all the services offered by a fund administration business. It is not mandatory to hire the services of a fund administration agency.

The job of such a business is to make it easier for you to manage your fund.

You can choose to operate without external help if the size of your fund is not too large or if you have the required skills and human resources. However, since real estate is a big industry and there are millions on the line, most managers prefer to outsource a number of tasks and ease the burden.

Look at things from a critical perspective and have an internal meeting to decide if you need help or not. You may have to hire more employees to take care of administration and accounting work and that may not always be more affordable or feasible than hiring a fund administration company.

At PrivateLenderLink.com, we strive to help lenders discover fund administration companies that serve the private mortgage industry. Scroll up and view each company’s profile, then visit their websites to learn more, and contact them directly.