Creating Your First Asset in WaterfallOne

Get a new real estate investment vehicle set up and ready to calculate distributions.

In WaterfallOne, an "asset" is a single investment vehicle: a property, office building, apartment complex, or portfolio partnership. Once you create an asset, you'll define your investor positions and waterfall structure, then activate it to start running distributions.

Before You Start

You'll need:

• The gross distribution amount for at least the first calculation (or just know you want to set up now)
• A list of investor LPs and their invested capital (or a spreadsheet to import)
• Clarity on your waterfall structure (return of capital tier rate, preferred return, carry split, etc.)

If you don't have your waterfall structure finalized yet, you can still create the asset and leave it in draft state. You can return and activate it anytime.

Step 1: Create a New Asset

From your WaterfallOne dashboard, click "Add Asset."

You'll see the onboarding flow with three sections: Asset Setup, Select Waterfall, and Review & Add. These guide you through the asset creation process in order.

What happens: WaterfallOne walks you through the onboarding flow. As you progress through each section, you'll add investors and configure your waterfall structure. Once the asset is created via Review & Add, the waterfall template locks to this asset, and you can't change its tier configuration retrospectively.

Step 2: Enter Asset Details (Asset Setup Section)

In the Asset Setup section, fill in:

• Asset name: Use something recognizable for your portfolio (e.g., "203 Main Street Mixed-Use" or "Midwest Portfolio Fund IV").
• Asset type: Select from Fund, Fund of Funds, Debt Fund, Single Asset, Investment Vehicle, or Other.
• Economic Start Date: When the investment vehicle was legally formed or when capital first deployed.
• Managing GP: Select the sponsoring GP entity from the entity selector.

After creation, Name, Asset Type, and Location remain editable. However, Economic Start Date, Managing GP, and Waterfall Structure are read-only and cannot be changed.

What happens: The asset record is created and held in draft. You move to the Select Waterfall section.

Step 3: Add Your Investors (Asset Setup Section)

Still in Asset Setup, add your investor positions.

You have two options:

Option A: Inline Spreadsheet Entry

Investors are entered directly in an inline spreadsheet table. For each LP, fill in a row with:

• The investor name
• The initial contributed capital amount (as of Economic Start Date)
• Whether this is an LP participation or a GP co-invest

Need more rows? Click "Add 5 Rows" or "Add 10 Rows" to expand the table. You can add more investors later.

Option B: Bulk Import via CSV

Click "Upload CSV." Download the template, fill it with your investor list (name, capital, LP/GP flag), and upload.

The import validates column headers and data types. If there are errors, WaterfallOne will show you which rows failed and why. Fix them and retry.

What happens: Investors are stored in the asset as "investor participations." Each participation has a capital balance, and all participations in the asset must have assigned capital. You can add or modify investor capital while the asset is in draft.

Step 4: Select or Create Your Waterfall (Select Waterfall Section)

In the Select Waterfall section, you now define how distributions flow through your investor base.

You can either:

Use a System Template

WaterfallOne provides system templates for common waterfall structures. Select one from the list and the template auto-populates all your tier rules.

Build from Scratch

If none of the templates fit, build a custom waterfall from scratch in the waterfall builder. You'll be guided through:

1. Return of Capital Tier: What percentage or method (pro-rata by capital, or sequential by class priority) returns investor capital first. Most commonly 100% pro-rata.
2. Preferred Return Tier: An annual percentage return (e.g., 8% per annum) paid on unreturned capital before the GP gets carry. Set the accrual base (unreturned capital only, or including unpaid pref), and whether it compounds annually.
3. Catch-Up Tier (optional): A special tier that gives the GP an outsized share of remaining cash to "catch up" to a target profit split after the LP has received their hurdle.
4. Promote Split Tier: The ongoing carry split (e.g., 80% LP / 20% GP) that applies after prior tiers are satisfied.
5. True-Up Tier (optional): A liquidating adjustment that fine-tunes the GP's final profit to hit an exact target (used at exit).

For each tier, you specify:

• The rule (pro-rata, sequential, fixed percentage, etc.)
• Any rates or percentages
• Whether it's mandatory or can be skipped if no cash remains

Once you complete the waterfall definition, save it.

What happens: WaterfallOne freezes your waterfall structure and locks it to this asset. From this point forward, every distribution you run will use this waterfall template. If you need to change your waterfall terms (e.g., change your carry split), you'll activate a new waterfall version at distribution time, but you cannot alter the one attached to this asset after activation. This is a safety measure to maintain a clear, locked waterfall configuration for audit purposes.

Step 5: Review and Add (Review & Add Section)

In the Review & Add section, you see a summary of:

• Asset details (name, Economic Start Date, Managing GP)
• Investor list and total capital
• Waterfall tiers with all rules and rates

Read through carefully. Check that:

• All investor capital amounts are correct
• All LP names are spelled correctly (they'll appear on distribution reports)
• Waterfall tiers match your fund agreement or operating documents

If you see an error, use the "Edit" buttons in each section to go back and fix it.

Once you're satisfied, completing the Review & Add step creates and activates the asset in one action.

What happens: The asset is created in active status. The waterfall is now locked. You can start running distributions immediately, or save it and come back later. Your asset is now ready.

What Happens After Activation

Once your asset is active:

• You can run distributions via the "Run Distribution" button
• You can add new investors (add new participations), but you cannot remove existing ones or retroactively change their initial capital
• You cannot change the waterfall tier configuration, but you can create a new waterfall version if terms change mid-life
• Every distribution will use your locked waterfall to calculate allocations

Editing After Activation

If you need to adjust something after activation:

• Add a new investor: You can add fresh participations anytime, but they start with zero capital history
• Modify investor capital for future periods: You can record capital events (additional investments, redemptions) that take effect going forward
• Change the waterfall: You create a new waterfall version in draft, test it, and activate it for future distributions. Past distributions remain on their original waterfall.

You cannot retroactively edit a finalized distribution or the waterfall it used.

What's Next

• Run Your First Distribution: Once your asset is active, see Running a Distribution to process your first distribution
• Understand Your Waterfall Structure: For a deeper explanation of how waterfall tiers work and the math behind allocations, see Understanding Waterfall Tiers
• Managing Multiple Assets: If you're managing multiple properties or funds, each gets its own asset record in WaterfallOne