Apartment Investing with LP's

[Joseph Wells]

I am somewhat new to Real Estate Investing. I currently own a few SFR's that provide me cashflow but have a goal for 2020 to acquire a multifamily or ideally an apartment building with a few investors. Can anyone shed light on the expected return that I should anticipate to provide to the limited partner's? I have seen a few that provide a 6% return. Is that good or fair or is it standard for LP's to obtain a higher return? I am in the state of NC if that helps determine apartment location as well. Thanks guys!

[Mark Allen Kenny]

@Joseph Wells You can structure it a number of ways.  6% is on the low side but I am seeing this more and more.  But with that 6%, there is usually an upside (i.e. addition return than just the pref).  With that said, you can also structure a higher pref with no upside.  Just this week I saw an offering that has a 10% pref but no upside.  Without going into too much detail, the syndicator listed it like this (two options):

--Class A income investors: 10% Preferred return / CoC (no upside)
--Class B growth investors 7% pref; 8.2% CoC; 20% AAR; 16.5 IRR
(5 year hold target)