Syndication - GP/LP
Bigger Pockets Members,
I'd like to ask some of the experienced investors out there how many of you put your own money into the deal on the LP side as well as acting as the GP and syndicator? Secondly, do LP's find this to be comforting that the syndicator has their own skin in the game? I'm sure this all depends on the deal.
Lastly, If you do join in on the LP side do you pay yourself returns equal to that of other investors. For example your syndicating a deal and the capital raise is $1,000,000 and your bringing in 9 LP's including yourself all throwing in $100k. If the COC return is 9% i'm wondering if you would pay yourself and the other 9 investor $9k each on their intial investment.
If you need more information to answer I will fill in the gaps.
Thanks in Advance.
Most Popular Reply
We put money into all our deals as well, and always on the LP side. That money is treated the same as any other LP money.
Agree with @Bruce Petersen that you don't have to as a sponsor and there are many reasons they might not. But if you are just getting started (which is sounds like you are) I think it will be a challenge to find investors if you don't personally have skin the game. That said, you can get a little creative there. For example--do you have immediate family putting money in the deal? We usually do, and I tell investors that I personally am putting $x into this deal, and that my immediate family (brother, dad, etc) are putting in $y.
At the end of the day, you need to show alignment of interests between the GP and LP--putting your own money in the deal is probably the best way to show/prove that.
Good luck!