Thoughts on how to structure a Multifamily partnership deal

[Rahul Punj]

Hi BP, I am looking to invest in my first midsize multifamily property in Central Florida area.  I would like to bring in some passive partners for the deal and I have a few friends that have shown interest but I am not sure of the best way to structure and present the deal to friends/potential partners.  I am focused on deals in the $2-$2.5MM range, with about $150K of my own money in the deal.  I will be planning to bring in about 3-5 limited partners to raise the necessary equity for the deal.  

If anyone has done partnerships of this size could you please recommend the best way to structure such a deal in terms of ownership, profit sharing and exit expectations....   I have tried to look through past forums and done some searches but I didn't really find anything specific enough that addressed this. If there is a guide / article or more detailed information available somewhere in BP--- please feel free to let me know.... thank you all !!!

Cheers!

[Todd Dexheimer]

This is your typical syndication. Any time you have a General Partner (you) and passive investors (Limited Partners), you have a securities and should use a securities attorney to set up the syndication. How you structure the profits is up to you. A common way is to have a 2% acquisition fee on the purchase a 1-3% asset management fee on the gross revenue and a 60/40 to 90/10 split on the profit (larger percent to the limited partners). Most people add in a preferred return of 5-8%.