MF Syndications...How do you stucture a deal on new construction?

[Daniel Brown]

I am currently located in a hot market right now (Nashville, TN), and there is a lot of new construction and development of large multifamily.  Our business strategy is to find stable properties with value add components, which are getting harder and harder to find without paying a premium.  My question is, how are sponsors structuring their syndications to provide their investors a good return on their investment and get their money back in 1-3 years on new large multifamily construction?  Are they relying solely on appreciation, hoping that the appraisal will come back higher because it's in an up and coming market?  Are they using it as a tax benefit for the investors during the years that they are still trying to stabilize the property?  I know that sponsors/investors are making money and there is a market for them........What am I missing?

[Zach Mitchell]

Also, the end value obviously needs to be higher than the construction costs. Developer makes their money from "construction management" fees of around 1-3% of construction costs, developer fees of like 2%-5% of construction costs. Other stuff built into the construction budget that is funded by lender and equity side. There's also an interest reserve component, which is pretty much the lender funding their own interest payments during construction.