Small Syndication Structure

[Ryan Van Duyne]

I am trying to figure out the right way to structure a small syndication with a few partners. I would be the GP and also be putting money in as an LP. If we all put $50,000 in to the deal how would the cash flow be split between everyone at a 70/30 split?

[E. C. "Stony" Stonebraker]

@Ryan Van Duyne  It is a bit more complicated than that.  I would recommend you read Joe Fairless' book "Best Ever Apartment Syndication Book" or Kim Lisa Taylor's book "How to Legally Raise Private Money." You can listen to podcasts and watch videos on this topic, too.  Ultimately, you'll need to speak to an attorney to get the full story.

Limited Partners (LPs) in this space want you as a GP to be incentivized to do the best you can.  That means you'd need to offer a preferred return to the LPs before you get any of the cash flow from operations.  This is different than the question you are asking, though.

Having said all of that, to answer your question literally, you would split the net monthly profits 70% to LPs and 30% to you as GP and upon sale, you would do the same split of the final proceeds.  

The setup in your question, though, is not realistic, IMO, but if you want to talk more, please contact me and I would be glad to talk it over with you.