Apartment Syndication Fees
Hi Everyone,
I have a few residential rentals both in my area (Boston) and Cleveland, OH and wanted to expand a little into a commercial deal in my local market (6-10 units, purchase price $2.5-4.0M).
I'd syndicate 70% of the deal to friends, family, and colleagues but wanted to know if my fees are reasonable for a first time syndication.
I'm thinking 3% acquisition fee, 80/20 equity split above a 8% preferred return and somewhere between a 1-2% annual management fee. No other fees. How does that sound?
Most Popular Reply
@John Fortes you have the right to make that call as you're leading your own syndications. We charge a modest 3% acq fee. I've seen acq fees as high as 5-6%. We charge 2% asset management fee as well as the 1% disposition fee you're not in favor which is cool to me. You're entitled to your own opinion. By all means for running the asset for the next 5-7, 10 yrs you don't think you're worth the 1% disposition fee to arrange the sell, which is a ton of work, by all means if you don't feel thats worth 1% the continue as you do and don't charge a disposition fee. I'm coo with that if you are. I'm not saying that's right or wrong on your end. That's your choice. Let me tell what else I've seen tho ...
I've seen sponsors charging 5-6 different fees (acq fee, asset management fee, refi fee, source the debt fee and dispo fees) Yeah seriously...lol! According to that we feel our model is right in line. How one person runs their company and operations doesn't dictate that other business owners should do the same. It's free enterprise my friend. In total our fees as sponsors is 6%. Happy Investing my friend.