Equity Fund Structure--HELP!

[Clay Manship]

All, I am currently in the process of raising a $500,000 equity fund to purchase a $1.5MM apartment complex. I am curious as to how you would structure this deal among partners. Here is the way it is currently set up:

Partner 1 - $100K

Partner 2 - $100K

Partner 3 - $100K

Partner 4 - $100K

Partner 5 - $100K

*However, the managing company/partner of the fund will own 20% to compensate for the ongoing management of the LLC and the property.

I have seen waterfall models where there is a "return on capital" and "return of capital" where the investor is paid a preferred return on their current outstanding amount of capital that has not yet been returned. Is this common? What then happens after each partner gets their original $100K returned, plus their preferred return? How do they continue to receive distributions/compensation for being involved in the fund?

Just looking for how you all might structure something like this. My securities attorney and I are working on it currently and wanted to get some input. Fire away!