What do investors see as a solid LP return?

[Kenneth Bell]

Hello all,

I am a real estate developer who has for the past 10 year solely focused on develp build and sell assets. I am now looking at a few deals that we will develop and then keep them in a GP/LP relationship. I am looking at the landscape of other multifamily GP/LP deals and it seems there is a wide range for both IRR and equity splits between GP/LP. I am trying to get a pulse on what is a good return metric for LP's. I am a strictly ground up developer. I am new to GP/LP deals but not new to development. I was targeting a 20/80 GP/LP with a 12-13% IRR with a 2 hurdles +14% IRR GP/LP goes to 30/70

+15.5% IRR GP/LP goes to 40/60.

These will be usually 25 to 50 unit infill multifamily deals usually townhomes or apartments

I would love the feedback

[Jay Hinrichs]

Right now with the Syndication MF model seemingly leaking oil all over the place.

Any return will be great so many are not returning anything and asking for Cash calls.

from my personal perspective I would do anything I could to NOT syndicate and subject yourself to those risks in case the deals don't work .. they don't work and you get massacred on SM etc etc.

Myself I would, if you need partners go for just a very few in more of a JV format with you as the managing member..

there is a ton to being a GP syndicator raising 3 to 5 mil 50k at a time.. you now have 100 partners and the amount of oversight  customer care and Risk in my mind has to be considered compared to what you do now which is build sell and make nice bucks without being beholding to anyone but your construction lender. ??

That is my other side of the coin thoughts.. Do you really need 100 small investors and are you really prepared to deal with all that comes with it.. As much as anything like @Chris Seveney points out frequently the annual reporting can be complex and costly and its mandatory otherwise your running some serious SEC risks..  On top of that to give 80% away I don't get that.  Do smaller deals and keep it all.