Active LP investors and or Syndication Proffesionals

[Joe Potenza]

Bigger Pockets LP investors and multifamily syndication professionals, I am curious to the parameters and investment criteria you all require and search for?

I am currently putting together a multifamily value add syndication. To get the conversation rolling, figured it would be best if I explain the basic investor package I am providing friends, family and colleagues. My team is offering 6-7% preferred return (tax benefits discussed with our CPA) distributed bi-annually, an estimated project IRR of 15.5% (in our base case), and hold period of 5 years. Our projected average CaC is 8.4%, after completion of our value add initiative (40 units).

My teams experience is in private equity space, so am curious to what non-institutional LP's look for in deals.

What are the minimum preferred returns?

Projected minimum IRRs?

Hold period, and distribution preferences?

Minimum equity requirements?

Looking forward to getting some different opinions on the matter!

[John Blanton]

@Joe Potenza it can be hard to put overall parameters as there are many factors that go into an investment criteria especially when you factor in overall risk

Some basics I hear commonly-->

6-8% preferred return

12-16% IRR

3-5 year hold or refi

$25-50k min equity contribution

These are very high level depending on geography, asset class and asset type they can vary greatly

At the end of the day it will depend on the return profile expectations of your individual investor base that will determine the return profile of each offering