Deferred Cash Flow Payments

[Steve Sprowls]

Curious about those who are in a syndication where the monthly/quarterly cash flow payments are being deferred.  How do you know or calculate how much money you'll be paid at a later date?

[Sam Grooms]

@Steve Sprowls, each deal is different. It sounds like you might be talking about a cumulative preferred return. If so, you would take your preferred return (say 8%), and multiply it by your investment (say $100K).  So you'd get $8K per year on your investment before the sponsor gets anything. 

It's important to note that a preferred return is NOT a guarantee of a return. It only states that you will get paid first. If the property never generates cash flow, or at least 8% of cash on cash return, you'll never get that entire 8% until the sale. 

Now, if you're not talking about a preferred return, there's simply no way to calculate how much money you'll be paid at a later date, because you don't know how much cash flow the property will generate. However, the sponsor should have provided you with their projections/estimates/forecast of the property's cash flows, and a sample return on your investment (by year). That would be the best place to get an idea of your future payments. 

Back to the preferred return structure for a minute. Most large syndicators/sponsors are now using online portals for investors to track their investment. If your's does, you can likely log in and it will show an up to the day calculation of how much you're owed from the preferred return. If your portal doesn't show this, I'd ask the sponsor to turn that metric on (it's almost a guarantee the portal is capable of showing it, the sponsor just hasn't enabled it).