Analyzing Syndications and Paying Investors

[Tyler Fischer]

Hi all,

I have two questions regarding the financing associated with syndications. First, I'm breaking down the costs into 3 broad categories: the purchase price, the closing costs, and the rehab costs (if any). For simplicity, let's assume I convince investors to pay for 100% of those costs. Now, when paying them their preferred interest rate - let's say 8% - should I be paying them that 8% based on the total money they invested? Or just 8% of the purchase price + rehab, or just purchase price? What is acceptable in these situations?

Second, if I'm charging an acquisition fee, is it normal for them to pay that upfront? Or should I take that out from the NOI for the first 12months?

Any insight is much appreciated! Thank you all!