Raising Funds for 30 Property Portfolio

[Anthony Washington]

Hello good people, 

I feel guilty about posting because I never contribute to this community but I know it's a great resource. I've come across an opportunity to buy a portfolio of 30 properties worth around $2 mil using seller financing with 20% down ($400k). I'm no stranger to raising funds but I've never sourced multiple partners which I'm sure will be at play here. I'm just looking for ideas as to how that works out as far as structure, dispersing returns or whatever insight you gifted people have. When I market to partners I want to be able to say "you'll get this much cash on cash return, this is the payout schedule, etc."

Just in general. I appreciate your input.

[Ben Wilkins]

@Anthony Washington - generally with a syndication, you split your profits as follows:

- Investors have a preferred rate of return, which is the percentage return that they want on their initial investment. Let's say it is 8%

- As the "management", you take a percentage of all income. Let's use 2%

- All profit after that point is split as equity between investors and management. 70% investors / 30% management for this example, but it depends on your skin in the game.

So how you word it to your investors: The investors will get a minimum preferred rate of return of 8% per year. Management will collect 2% of all profit, and the remaining profit will be split 70% / 30%. 

Here is a screenshot of an example, where management would collect close to 10% of all cash flow on top of the PM fees that would be collected. The investors get the majority share, but they also put down the majority investment. You collect on the cash flow, and have an incentive to improve the cash flow.

This is one method among several, but it has given fairly good results. I hope it helps!