investing in real estate LLC - what to watch for

[Roy Mitle]

I was recently approached by a LLC that includes 100+ members and invests in large real estate (>$100MM+) projects. The idea is that you invest along with them and get fractional ownership. The project is rehabbed, refinanced and sold off.

The active members in the LLC take 1.25% upfront and 50% of the cashflow when the properties are sold (around year5). year 1-4 you get 100% of the cashflow. During all this time you get K1.

a. Is this typical fee for a real estate LLC.

b. Is there anything one has to be careful about. Any experience from people on this thread.

c. If we get K1, its a pass through as income. I am in the high tax bracket. Do you get any tax benefits. 

Thanks a lot