How would I structure an apartment syndication deal?

[Bellman Tumasang]

Let's say I want to get investors and syndicate a 10 unit apartment building. I create Blue Estate LLC ( manager managed by me ) and Blue Estate Equity Fund I LLC which holds title to the 10 unit apartment building ( manager managed by Blue Estate LLC )

Syndication fees are 1% asset management fee of total capital raised paid each your to Blue Estate LLC, 1% of purchase price paid to Blue Estate LLC and 1% of sale price paid to Blue Estate LLC. 70/30 profit split with 30% to me as an individual and 70% to investors. 6% preferred return.

The purchase price is $1m I put that $250k raised from investors. I finance $750k with an interest only loan with a 4.5% rate. 

I rent each unit out for $1k so 10 * $1k = $10k * 12 = $120k and let's assume 50% goes to expenses so an NOI of $60k.

That's a 6% cap rate when I buy the building for $1m. Since the debt is $750k at a 4.5% rate interest only my annual debt service is $33.75k. My NOI of $60k - $33.75k = $26.25k then divided by the downpayment of $250k is a 10.5 Cash on cash return.

$250k * 0.06 = $15k and since I pay investors a 6% preferred return do I pay them first $15k then distribute the remainder $11.25k in a 70/30 ratio with an additional $7.875k going to investors and $3.375 going to me. And I repeat each year.

Your probably thinking why pay management fees to Blue Estate LLC instead of yourself. The reason why is because I want to start a big real estate private equity firm in the future. By setting it up like this I could say my firm has millions of dollars of AUM which could help with showing a track record and crowdfunding for future deals.

Could someone please explain legal fees, registering with the SEC, setting up a PPM etc.

Do you like my structure? Any suggestions?