Real Estate Profit Distribution

[Derek G.]

I'm in the process of finalizing talks with an investor to commence a real estate development project and would greatly appreciate assistance in clarifying a few things given certain scenarios:

Investor injects 100% of financing into a project. I’ll be the sponsor dealing with day to day operations. In this scenario is a 50/50 split of profits industry standard or is a preferred return such as 6% for the investor with a 50/50 split more common?

Investor or multiple investors (such as a syndication) injects 25-30% capital into a project, developer/sponsor provides 5% and the rest is financed by the developer. In this scenario is it common to provide the investor 20-25% of profits or a preferred return plus 20-25% of profits? It would be split amongst the number of investors and how much each contributed.

Is there any software that you have found to assist with distributions especially with multiple investors? Also is the preferred return typically paid monthly or at the end as a lump sum?

When purchasing the land itself and investor funds are used to purchase, is interest typically carried over or deferred? It can take at times a year to entitle a property plus construction if developed and wasn’t sure typically at what point they start getting paid especially if it is a partnership.

Your time will be greatly appreciated in clarifying these items for me based on your experience.

Best Regards,

Derek