If deal is big then better to syndicate but if you can invest and buy yourself then go for it
Sponsor is Syndicator and other person is GP or General person (sponsor)
GP is one who find and will manage deal
Limited Partners or limited raise funds and silent and one of these could be guarantor. Also called investors
Lender also can be LP
Lender will require GP to raise 20% -30% of cost of investment
If its your first time then this jargon should be aware to you.
What is Water fall or liquidation sale?
When you decide to join multifamily deal and when you decide to sell and make profit and distribute profits to investors then this is called water fall (as water fall hits rocks). All investors will get there first investment back and then all profits split. 20% goes to gp for doing deal and 80% split prorate to investors based on there investment on all level.
GP can be made of multiple person or groups depending upon there expertise of knowledge
Water fall can have multiple levels. It can also asset management fee.
There’s always room to customize deal
In mulitfamily also called preferred returns. In Multifamily, it can not be new construction. Its usually old that need to be rehab or refurbished and after running for few years and then you can sell.
So till we time we sell, we give investors some interest like 6% so something extra return on investment . Its not always a case but something to know.
Legal structure is Limited partners GP is general partner and LP are lps of entities
LLC is recommended to most clients. In this structure. GP is called Manager and LPS are called members
Listen more here
Joseph Interviews Adnan discussing about all the legal and structuring aspects to multifamily or apartment syndication when raising money from passive investors and buying apartment buildings.
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