Raising Capital With Multiple LP's

[Gabe Goudreau]

Hello,

This seems like a straightforward concept, but how does investing with multiple LPs in a real estate syndication affect the amount of equity each investor has? Is it simply that the amount of capital each LP invests is proportional to the overall equity split? 

For example, doing a 30/70 equity split where $100K is needed to be raised between 3 LPs, one invests $50k and the other two invest $25k, would the $50k investor "own" exactly half of the 70% LP equity and the other two investors would "own" 25% each? 

Along with this, would the return metrics like ROI and IRR be based solely on the overall equity invested in the project, or would it be based on the minimum investment or each exact amount invested?

Would appreciate some insight on this topic, thank you! 

[Brock Mogensen]

Yes, equity is calculated based on their proportionate investment of the LP equity.

IRR and other metric calculations are generally calculated based on the LP level. Unless you are offering different tranches/return structures for each LP. The return % for each investor should be the same.