Equity partnerships

[Shane Vince]

Hey guys I'm looking to invest with a company that finds and sets up huge multifamily deals. Then gets investors to put up the equity for the down payment. The company is called Creative Realty Partners. Does anyone have any experience with these guys or anyone similar. The deal seems to check out and look great.

[David Thompson]

Hi Shane,

I don't know anything about this firm.  I can share a few insights. Typical fees w/syndication are:

1) Acquisition fee (1-3%) of the purchase price received at close to the GP.

2) Asset Mgt fee (1-3%) to essentially implement the business plan and hold the property manager accountable.

3) Disposition fee - (1%) of sale price.  This is optional.  

You should look for a solid track record and also we like to see the GP investing some of their own money in the deal.  The value add deal must make sense, are they purchasing price per unit under comps in the area and rents under market so that after they add value, they are still projecting rents under market.  You want conservative underwriting (review assumptions).  They should be in strong markets, value add plans make sense and experienced team are the three keys to review.  Do they offer a preferred return (8 to 10%) where LPs get paid before GPs on cash flow distributions and sale.  Know the exit strategy and does it make sense to you.