Crowdfunding 50-Unit Deal: Are These Fair Terms?

[Mark S.]

I have an opportunity to invest in a crowdfunding, 50-unit opportunity with the following terms:

- 8% preferred return

- 25% net rental income

- 50% profit upon sale 

Property management fee is 7%.  Markup on maintenance can't exceed 10%.  

For a passive investor, would you say these are fair terms?

[Mark Robertson]

Those are horrible terms! There is 1000's of syndications and crowdfunding deals that offer 8% pref with a 70/30 split or better. (with the investor getting 70% after the 8% is paid and you receive your return or capital).  I am in deals from 15% preferred 50/50 to 8% pref 90/10.  5% is a typical management fee.  I would run not walk away from this deal.

Also read the ppm and find out what all the gotcha fees are.  Asset management fee is a favorite that can kill your returns if not structured fairly.