How to split cash out refi funds with investor

[Kyle Barton]

When doing a cash out refi on a property where the cash out amount is more than the amount originally invested, how do you split the cash out amount between the investor(s) and GP? Would the investors get the full cash out amount, do they get the full amount up to their amount invested and then split the funds above and beyond that, or split the full amount based on ownership percentages? The entity docs leaves it to our discretion, just wondering what the norm is in the industry. 

[Ian Plocky]

@Kyle Barton, it depends on your PPM/LP agreement. 

Are you offering a preferred return? Or is there a pre-determined split?

My office typically does 100% to investors until their capital contribution has been returned, then a split for the equity growth. In this scenario, the GP is not rewarding itself until it's profitable.

Hope this helps. Reach out anytime.