What are lp in syndications looking for?

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Don KonipolBusiness Member
Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
1y
Quote from @Chris Howell:

I am interested in learning more on expectations of a lp in a passive multi family syndication?

1. Verifiable track record of sponsor in same or similar deals
2. Background/personal history of principal individuals 
3. Realistic pro forma statements
4. Limit on upfront fees paid to sponsor or related parties
5. Reasonable “profit” split between GP and LPs
6. ‘Staying power” of GP
7. Transparency 
8. My familiarity with property type / geographical area
9. Risk adjusted ROI
10. Cash flow projections 
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  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    1y
    Quote from @Chris Howell:

    I am interested in learning more on expectations of a lp in a passive multi family syndication?


     I recommend going over to passive pockets and checking that out as there will be a ton of info there. also reddit and facebook groups that cover this topic

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  • Chris Howell
    OP
    Tulsa ok · Member since 2025 · 84 posts · 60 votes
    1y

    @Chris Seveney

    do you invest in syndications as an lp and if you do what are you expecting.   Immediate distributions, cashflow or waiting for forced appreciation and leverage to get your returns 4 or 5 years down the line? 

    0Reply
    • Ronald RohdePro Member
      Attorney · Dallas, TX · Member since 2016 · 5k+ posts · 2k+ votes
      1y
      Quote from @Chris Howell:

      @Chris Seveney

      do you invest in syndications as an lp and if you do what are you expecting.   Immediate distributions, cashflow or waiting for forced appreciation and leverage to get your returns 4 or 5 years down the line? 


       It depends. New construction won't have cashflow. Stabilized acquisition absolutely needs year 1-2 major distributions.

      1Reply
    • Chris SeveneyBusiness Member
      Moderator
      Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
      1y

      @Chris Howell I look for experienced sponsors who know how to evaluate risk reward. I would take 9% all day long with an experienced sponsors over 15% projected with someone inexperienced 

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  • Chris Howell
    OP
    Tulsa ok · Member since 2025 · 84 posts · 60 votes
    1y

    @Ronald Rohde

    What Would perfect payout look like  for you  in a value-add deal?

    0Reply
    • Ronald RohdePro Member
      Attorney · Dallas, TX · Member since 2016 · 5k+ posts · 2k+ votes
      1y
      Quote from @Chris Howell:

      @Ronald Rohde

      What Would perfect payout look like  for you  in a value-add deal?


       2x EM after GP

      0Reply
  • Don KonipolBusiness Member
    Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
    1y
    Quote from @Chris Howell:

    I am interested in learning more on expectations of a lp in a passive multi family syndication?

    1. Verifiable track record of sponsor in same or similar deals
    2. Background/personal history of principal individuals 
    3. Realistic pro forma statements
    4. Limit on upfront fees paid to sponsor or related parties
    5. Reasonable “profit” split between GP and LPs
    6. ‘Staying power” of GP
    7. Transparency 
    8. My familiarity with property type / geographical area
    9. Risk adjusted ROI
    10. Cash flow projections 
    Private Mortgage Financing Partners, LLC
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    • Ryan Foster
      Member since 2021 · 13 posts · 4 votes
      7mo

      @Don Konipol Great list Don. How are you actually gathering all of this info on a deal? I find myself spending hours just trying to verify half of these.

      0Reply
    • Ryan Foster
      Member since 2021 · 13 posts · 4 votes
      7mo

      .

      0Reply
    • Don KonipolBusiness Member
      Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
      7mo
      Quote from @Ryan Foster:

      @Don Konipol Great list Don. How are you actually gathering all of this info on a deal? I find myself spending hours just trying to verify half of these.

      I both syndicate deals and invest in other syndications- well at least I did until 6 months ago.  Because of transparency issues as well as expected ROI and cost/net asset value consideration I’m reinvesting proceeds of my LP holdings into selected REITs. 

      If you as an investor aren’t willing to do the necessary research/due diligence on the investments your considering then you’re probably better off either identifying an advisor of some sort you have confidence in or find an investment requiring less due diligence.  
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  • Chris Howell
    OP
    Tulsa ok · Member since 2025 · 84 posts · 60 votes
    1y

    @Don Konipol

    Thanks that is very helpful information and insightful on what makes a deal comfortable for someone.   Would you be hesitant if the sponsor was jumping from sfr to multifamily but has a track record for 20+ years of running a value add sfr portfolio and wants to scale same model in multifamily.   If they can show their personal portfolio and how they and team are hands on at rehab and management over that time with high margins and conservative debt to value.   What kind of return would you want if their was a guaranteed monthly payment made from GOI so you arent waiting years for distributions but can have a monthly payments with lump sum at the end with refinance or sale?  

    thanks

    0Reply
    • Mike Dymski
      Investor · Greenville, SC · Member since 2016 · 5k+ posts · 13k+ votes
      1y

      Most people with 20+ years of in place systems and high margins would not want to take on the hassle or split profits and share their business with investors.

      1Reply
    • Chris SeveneyBusiness Member
      Moderator
      Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
      1y
      Quote from @Chris Howell:

      @Don Konipol

      Thanks that is very helpful information and insightful on what makes a deal comfortable for someone.   Would you be hesitant if the sponsor was jumping from sfr to multifamily but has a track record for 20+ years of running a value add sfr portfolio and wants to scale same model in multifamily.   If they can show their personal portfolio and how they and team are hands on at rehab and management over that time with high margins and conservative debt to value.   What kind of return would you want if their was a guaranteed monthly payment made from GOI so you arent waiting years for distributions but can have a monthly payments with lump sum at the end with refinance or sale?  

      thanks


      SFR vs. MFR are two very big different animals and I would have concerns.

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    • Todd Dexheimer
      Rental Property Investor · St. Paul, MN · Member since 2016 · 3k+ posts · 3k+ votes
      7mo
      Quote from @Chris Howell:

      @Don Konipol

      Thanks that is very helpful information and insightful on what makes a deal comfortable for someone.   Would you be hesitant if the sponsor was jumping from sfr to multifamily but has a track record for 20+ years of running a value add sfr portfolio and wants to scale same model in multifamily.   If they can show their personal portfolio and how they and team are hands on at rehab and management over that time with high margins and conservative debt to value.   What kind of return would you want if their was a guaranteed monthly payment made from GOI so you arent waiting years for distributions but can have a monthly payments with lump sum at the end with refinance or sale?  

      thanks


       Larger MF is different from SF's. I would say that adds a large amount of risk to the deal. 

      0Reply
  • Chris Howell
    OP
    Tulsa ok · Member since 2025 · 84 posts · 60 votes
    1y

    @Mike Dymski

    Thanks For responding but I have to disagree if you are moving up in asset size you will have to bring in some kinda of capital and or partner that can help with that.   If you are looking to double or triple in size in a 3 to 5 year period you will have to do something that scales at a faster rate than what you have done for 20 years.   But would love to learn strategy or idea to get it done a different way.

    thanks

    0Reply
  • Chris Howell
    OP
    Tulsa ok · Member since 2025 · 84 posts · 60 votes
    1y

    @Chris Seveney

    thanks for your answer it helps. I have a follow up questions.  Why do you see those as 2 very different animals?  Have you managed and rehabbed both types of assets personally.  Is there something different about running numbers and managing 25 single families  spread across multiple places verses running numbers and due diligence on 36 units located in one location.  I know there will be differences for sure but seems like a multi-family is alot of single families in a compact spot under a couple of roofs. Ive never rehabbed and managed anything larger than a 4 plex  which is same to me as a sfr.    Very interested at learning from your experience on why they are such different animals. ?  Look forward to keep exploring and learning from you!

    0Reply
  • Evan Polaski
    Cincinnati, OH · Member since 2020 · 4k+ posts · 3k+ votes
    1y

    @Chris Howell

    As for what I am looking for as an LP is someone I know, like and trust.  This can come from many different directions, but most commonly it is people that you have a personal relationship with and/or a referral from a close friend that I trust, especially when you are starting out, and even then it is still hard because you need to not just have these friends, but they also have to have some liquidity to invest.

    And to address your other question about track record in SFR vs MF, to some extent you are correct on the assessing deals. But, having met people that have done this, and a lot is in how you market it.

    BUT, in my experiences, and I know a few contractors that have a fair number of rentals, the issue in this transition comes from experience running teams.  When you become a syndicator, you are running a company, not a bunch of properties.  Managing people and communication are two major skill sets needed to be successful.

    So, while the 20 yrs of single family can be helpful, I would be more apt to invest as an LP if you told me you have a lot of great success in SFRs, but more so that you run a 40 employee GC business, with salaried admins, project managers, estimators, accountants, etc. 

    1Reply
    • Chris Howell
      OP
      Tulsa ok · Member since 2025 · 84 posts · 60 votes
      1y
      Quote from @Evan Polaski:

      @Chris Howell

      As for what I am looking for as an LP is someone I know, like and trust.  This can come from many different directions, but most commonly it is people that you have a personal relationship with and/or a referral from a close friend that I trust, especially when you are starting out, and even then it is still hard because you need to not just have these friends, but they also have to have some liquidity to invest.

      And to address your other question about track record in SFR vs MF, to some extent you are correct on the assessing deals. But, having met people that have done this, and a lot is in how you market it.

      BUT, in my experiences, and I know a few contractors that have a fair number of rentals, the issue in this transition comes from experience running teams.  When you become a syndicator, you are running a company, not a bunch of properties.  Managing people and communication are two major skill sets needed to be successful.

      So, while the 20 yrs of single family can be helpful, I would be more apt to invest as an LP if you told me you have a lot of great success in SFRs, but more so that you run a 40 employee GC business, with salaried admins, project managers, estimators, accountants, etc. 

      Thanks for the response and insight i see where you are coming from on team management. I believe we might be comparing different sized assets the properties i would start on need a team of about 5 people (manager, maintenance team, accountant, me as manager and GC and investor knowing how to do due diligence and rehab costs and my lawyer and my trusted subs ive used for years. I think you are talking very large projects need huge teams where I am talking mid sized value add deals that are to big for mom and pop type investors on their own but that are to small for big syndications to mess with because it doesnt move the needle for them.
      Where i am probably  off is in how I’m thinking about bringing in outside capital. Instead of a GP/LP structure, maybe these types of deals are better suited to joint ventures with just a few partners. Still, the GP/LP setup is interesting to me, and I’m working through how it might apply in this space.

      Thanks again for the perspective.

      0Reply
  • Don KonipolBusiness Member
    Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
    1y

    While it’s still possible to “bootstrap” a syndication as a sponsor, it is much more likely to cost a fair amount upfront.  Here’s an estimate of “startup” costs

    1. Legal Reg D compliance - $15,000 +

    2. Professional website - $5.000

    3. Investor interface software - $10,000 +

    4. Online marketing / promotion - $10,000 +

    5. Earnest money for proposed purchase.  -  $25,000

    6. Loan application, appraisal, title report, etc. for proposed purchase - $15,000

    7. Working capital - $25,000

    Minimum initial capital BEFORE first dollar of syndication money raised - $105,000

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    • Jay HinrichsBusiness Member
      Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
      7mo
      Quote from @Don Konipol:

      While it’s still possible to “bootstrap” a syndication as a sponsor, it is much more likely to cost a fair amount upfront.  Here’s an estimate of “startup” costs

      1. Legal Reg D compliance - $15,000 +

      2. Professional website - $5.000

      3. Investor interface software - $10,000 +

      4. Online marketing / promotion - $10,000 +

      5. Earnest money for proposed purchase.  -  $25,000

      6. Loan application, appraisal, title report, etc. for proposed purchase - $15,000

      7. Working capital - $25,000

      Minimum initial capital BEFORE first dollar of syndication money raised - $105,000


      in addition Don many of these larger loans require a hefty due diligence non refundable deposit of 25 to 50k.. not that I have ever done one but thats what I hear and have been quoted on some larger loan scenarios.. the issue is are the lenders real or just pump and dump due diligence fee  thieves :)
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  • Todd Dexheimer
    Rental Property Investor · St. Paul, MN · Member since 2016 · 3k+ posts · 3k+ votes
    1y

    There are a lot of things that LP's should be looking for, but in my experience, most LP's don't follow what they should look for, but instead only focus on deals with the "biggest" stated returns. Unfortunately, a lot of those deals end up with the lowest returns. 


    LP's should be focusing on finding GP's and deals that meet their investing goals. If you want investments that provide good cash flow, are conservative, and provide long-tem value, then don't go with the deal that has fake cash flow (tons of syndications do this), floating rate/bridge debt, and are short term holds. 

    1Reply
  • Chad AckermanBusiness Member
    Investor · Dublin, OH · Member since 2019 · 32 posts · 10 votes
    7mo

    Great thread! One thing I'd add that often gets overlooked before even evaluating deals is taking the time to build your foundation first.

    A lot of LPs jump straight into looking at deals and get distracted by projected returns or asset classes that sound exciting — but haven't asked themselves the foundational questions: Why am I investing? What do I actually want this capital to do for me? What's my timeline? Do I need cash flow now or am I building long-term wealth?

    This matters because different asset classes behave very differently. A value-add multifamily deal has a completely different return profile than a stabilized acquisition, new construction, or a debt-based syndication. If you're not aligned with how a deal works before you invest, you'll either be frustrated waiting for returns that aren't structured to come when you need them — or worse, you'll chase the "biggest" projected returns (as Todd pointed out) and end up disappointed.

    The framework I use with investors starts with Clarity — getting crystal clear on your why, your goals, and your personal financial picture. From there you can define your actual buy box: what asset classes, return structures, and hold periods actually fit your life. Then the Action of evaluating and selecting deals becomes much more focused and intentional, rather than reactive.

    When an LP has done that work upfront, they're far less likely to make an emotionally-driven investment decision and far more likely to find deals that truly serve them.

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  • Jason Merchey
    Investor · Hendersonville, NC · Member since 2013 · 755 posts · 281 votes
    7mo

    Your site is pretty neat. I signed up for some content. 

    1Reply
    • Chad AckermanBusiness Member
      Investor · Dublin, OH · Member since 2019 · 32 posts · 10 votes
      7mo
      Quote from @Jason Merchey:

      Your site is pretty neat. I signed up for some content. 

      Thanks so much, @Jason Merchey — I really appreciate that, and welcome to CARE Insights!

      It means a lot to hear that the content is resonating. This is exactly why I built it. One of the things I hear most often from people trying to get into passive investing is that they feel completely overwhelmed — and honestly, that makes total sense. The information out there tends to assume you already know the basics, which leaves a lot of people feeling like they're missing something before they even get started.

      There's just not enough quality education built specifically for new LPs — and that gap has always bothered me. CARE is my attempt to change that, one resource at a time.

      I hope CARE Insights gives you a solid foundation to build from. And if questions come up along the way, don't hesitate to reach out — that's what this community is here for.

      Looking forward to being a resource on your journey! Thanks @Jason Merchey I appreciate that.  I've been trying to develop some quality content to help educate new investors.  Too often I hear from people trying to get into this space that they are overwhelmed.  Which I totally understand.  There isn't a lot of education out there to teach you how to be an LP.  So, I'm trying to help bridge that gap and put together material to give people a good place to start.  Thanks again.

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  • Quentin Cornell
    Member since 2026 · 4 posts · 3 votes
    6mo

    This thread is gold. @Don Konipol nailed the top 10 and I want to zoom in on #7 because in my experience it's the one that kills deals more than anything else: transparency.

    @Ryan Foster you asked how you actually gather all this info before writing a check. That's the right question and honestly the answer right now is... it's a pain. You're emailing the GP, asking for docs, cross-referencing their claims with public records, trying to verify track record through references. It takes forever and most LPs either skip steps or just go with their gut.

    Here's what I think is changing though. The GPs who are going to win the next few years are the ones who make due diligence easy for their LPs. I'm talking about giving investors a portal where they can log in and see everything in one place: ownership percentage, distribution history, property documents, expense reports, tax docs. Not a PDF email attachment once a quarter. An actual dashboard.

    @Don Konipol mentioned $10K+ for "investor interface software" in his startup cost breakdown. That used to be accurate but there are platforms now bringing that cost way down, especially for operators doing mid-size deals ($1M to $10M range) where the full enterprise software is overkill. The tech side of running a syndication is getting cheaper fast.

    The other piece that's underrated: audit trails. @Todd Dexheimer mentioned "fake cash flow" being a problem in syndications. You know what makes it really hard to fake cash flow? When every distribution, every expense, and every capital event gets logged on an immutable ledger that nobody can edit after the fact. That's where blockchain based record keeping actually makes sense in real estate, not as some crypto speculation thing but as a trust layer between GPs and LPs.

    @Chris Howell to circle back to your original question about what LPs want: they want to not feel like they're flying blind after they wire the money. The bar is shockingly low right now. Most syndications send a quarterly PDF update and maybe a K-1 at tax time. Any GP who gives their investors real time visibility into the deal is going to stand out massively.

    @Chris Seveney your point about taking 9% with an experienced sponsor over 15% with someone new is exactly right. Trust is the product. The returns are secondary. And the fastest way to build trust at scale is through transparent systems, not just personal relationships.

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