What percentage should I take for Syndication?

Question

So, I am an investor in NY (not in the city) and just until now I did some single family investments and some multi family investments. I am now interested in investing with money from friends and family and was wondering what is an acceptable cut to find the deal, find mortage funds, find the management company and make sure that everything runs smooth with the property and rental. We are talking about a hi cash on cash return for a home designated for student housing, probably 20% or more. What is an acceptable syndication percentage rate that I can take for myself for doing all that work and always be responsible for anything that happens to the property?

Any input is appreciated. No input is superfluous.

Thank you in advance.

Salomon

Any input is appreciated. No input is superfluous.

Thank you in advance.

Salomon

Paul Moore · Answer

Hi @Salomon W.. Great question. There are a lot of books and podcasts that will help resource you on issues like this. I would recommend the book by Gene Trowbridge: It’s a Whole New Business.  @Brian Burke has a great BP book called The Hands-Off Investor.

I would recommend that you consider giving your investors a certain minimum and will return first before there’s any split. Perhaps around 10% for a deal like this. Then you split everything above that approximately 70% to the investors and approximately 30% to you, depending on lots of circumstances. And you might want to take a small asset management fee off the top to keep you in business, perhaps one percent of the asset or equity value annually.   Good luck!