@Angus Brooks I work for a large developer where we are doing deals $40 million+ on multifamily. We always do limited partnership structures.
You would be the general partner (GP), and would bring 3% - 7% of the required equity. You would manage the partnership for a 1% asset management fee, which includes doing all of the legwork from acquisition to disposition and refinances, and accounting. You could also charge an acquisition/ developer fee, usually 2-4% of the purchase price + capex. As the GP, you could hire a property manager and they would charge 3%, or, you could manage it yourself and charge 3%. There are many different ways to structure the waterfall, but typically under this structure there is a level called "promote". Promote occurs when your investors (limited partners or LPs) have received all of their preferred return and capital back. Once you hit the promote, the GP splits the distributable cash with the LP's, usually 50/50, but you can negotiate any split that you want.
The LP's are meant to be passive investors and will require a preferred rate of return (pref). Depending on the nature of the deal, and the type of limited partner investor (high net worth individual vs. institutional partner) the pref rate is usually 6-12%.
Like I said, the pref and promote splits are all negotiable. Also, the type of cash flow and how that gets applied to the waterfall is negotiable as well. I've seen deals where only cash flow from refinances or sales will pay capital balances and pref, while operating cash flow will only pay down accrued pref and the remainder gets split with the GP.
I hope this helps. I'm putting together deals for my company where we use this structure, but I am also using this on my own investments on a much smaller scale. If you have any questions please and hesitate to reach out.
