Investment approach
DNPI's Fee of 50% of Profit in a Property Project: How It Works
DNPI's fee is 50% of what is left after project costs; the other half stays with the investor. What is deducted before the split and when it is paid is set by the contract, not by the number 50.
DNPI's fee of 50% of profit means it is calculated on the distributable profit of the project, that is, what remains after costs and obligations, and the other half stays with the investor. The words "50/50" alone say nothing about what counts as a cost, when payments are made or who bears a loss. In the DNPI model, DNPI's fee is 50% of project profit, and the rest is set by the project contract.
What exactly is split in half
What is split is not the sale proceeds and not the difference between the purchase and sale price. What is split is the distributable profit, and its size depends on which costs the contract allows to be deducted before the split: purchase, closing and registration, taxes, renovation, financing, sale. The list and the order of calculation are set by the contract, and in accounting terms the result is determined by the accounting and tax rules of the specific structure. The cost items are covered in detail in the piece on costs before DNPI's fee.
Three different "50s" are easy to confuse: the share of profit, the share of capital and the share of votes. They may coincide or not. If you see "50/50", ask which one it refers to.
What the calculation looks like: a worked example
A worked example, not a forecast and not the terms of a DNPI contract. Suppose the investor put in 1 M€ and the project ended with distributable profit of different sizes. Return is calculated here, for illustration, as the investor's profit after DNPI's fee divided by the amount invested; in a contract the base may be different.
| Distributable profit | Investor's half (50%) | Investor's return over the project | Contractual 10% threshold |
|---|---|---|---|
| €100,000 | €50,000 | 5% | below |
| €200,000 | €100,000 | 10% | at the threshold |
| €300,000 | €150,000 | 15% | above |
| €500,000 | €250,000 | 25% | above |
In the DNPI model, if the investor's return over the whole project, after distribution, turns out lower than the contractual 10%, DNPI pays compensation from its fee. How the base is calculated and what limits apply to the payment is set by the contract for the specific project. The details are in the article on the contractual 10% compensation.
What the 50% fee does not tell you
The formula leaves four things open, and each one has to be found in the contract.
- When profit is calculated: after the asset is sold, in stages, or on some other date.
- Who pays taxes and out of what amount: the project's own taxes, the investor's taxes as a resident or non-resident.
- How losses are shared. If the project loses money, a formula about profit is silent.
- How time is counted. Two years and five years with the same profit give different annual returns.
On losses in contractual structures, the Código Civil offers a starting point for a sociedad civil: if the parties agreed only on a share of profit, the share of losses is the same (art. 1689), and a pact that excludes a participant from all the profit or from all the losses is void (art. 1691). Whether this applies to your structure depends on the form of the project, and that is a question for an abogado (lawyer).
How to check that the split is fair
Ask the operator for a calculation under two or three scenarios with numbers and go through the list.
- Which costs are deducted before the split, and whether the operator's fee is among them.
- Whether there are costs the operator pays to parties related to it, and how the price compares with the market.
- Which document supports each item: invoice, certificate of completion, bank statement.
- Who checks the final calculation, and when.
For DNPI projects the investor has a digital cabinet with the budget and the status of works. But what exactly goes into the split in your project is determined by the contract, not by the cabinet.
Who this model does not suit
A model with a share of profit does not suit someone who wants to know the result in euros in advance: the amount depends on the outcome of the project. It does not suit someone who needs regular income either: in such models payments are usually tied to the completion of the project or its stages, and the contract says when exactly. Nor does it suit someone who is not ready to check the calculations. Past project results do not guarantee future ones.
You can run your own numbers in the investor calculator, and the assumptions of the calculation are described in the methodology.
Questions and answers
What does a fee of 50% of profit mean in a property project?
The distributable profit of the project is divided equally between the investor and the operator. What counts as distributable profit is defined by the contract.
Does the investor receive their 50% from the first euro?
It depends on the contract. Project costs are usually deducted before the split, and the order of payments, including the return of invested capital, should be described in the contract separately.
Does a fee of 50% of profit give DNPI a say in the investor's property?
No, a share of profit and votes on decisions are different things. Which decisions need the investor's consent is covered in the article on investor rights.
How do you calculate return after DNPI's 50% fee?
Divide the investor's profit after DNPI's fee by the amount invested, then account for the term and taxes. To compare projects of different length, calculate both total and annual return.
