Crowdfunding 50-Unit Deal: Are These Fair Terms?
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?
Most Popular Reply
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.