Hello BP, I am currently looking at a value-add multifamily deal that is 13 units. I would be purchasing this in a syndication. Let's say I want to hypothetically spend about 7k/door on renovations to get my pops in rent. My question relates to the $91k (13 units x 7k) I need.

I have heard Rod Khleif and others mention that you should always raise the renovation money along with your initial equity raise. My two concerns with this are:

1. Because I'm raising this extra equity up front, my cash on cash returns are lower than I'd like in the early years even though my cap rate and project IRR are where I need them to be.

2. This is sort of dead money because I am now paying a pref return on this money even though it's not being put to work on a count of I can only renovate units as they turn over.

The other options are to renovate units with the property cash flow which seems like the wrong way to go about it - and that still doesn't alleviate the problem of property renovations eating into CoC returns though it solves the problem of "dead money".

The last solution I can think of is to raise the money year by year as you need it which presents other problems. The obvious being that, because this is a syndication, the members equity will constantly be changing and I'll have to keep amending operating agreements and such.

Can any experienced syndicators weigh in here and let me know how they approach this and if I am misguided in my analysis of this?