in our leases we place a payment waterfall schedule.  

Hi @Harmony MatsonIf you're interested in learning more about real estate, I have a pdf that goes in depth about the laws, mortgages, important time value metric, development, commercial, single family, waterfall topics as well as reits and so much more. 

And have "skin in the game" and not take large upfront fees and large carried interest/waterfalls/etc...and not just close it successfully (which many people can do) but actually meet or exceed their projected returns and feel confident that they can do it???  

One suggest was to put a little waterfall in it, perhaps an indoor vine going up the poles...Im just looking for suggestions on how to handle paint / look to maximize saleability, I can do the same wall paint color in the other rooms if I get it worked out in this family area.

Highly recommend you have a qualified attorney in your state draft the operating agreement.A multi-member LLC taxed as a partnership might be the way to go.Partnership agreements are pretty flexible and "waterfall schedules" can dictate how profit/loss and distributions are allocated during the life cycle of the LLC. 

Waterfall up to next 3% IRR (Investor 75% - Sponsor 25%)4.

Complex formulas (e.g. waterfalls) create misaligned incentives between general partners and limited partners - Limited partners should share in outsized gains.   

When sold, the waterfall looks like:0.

This could be a waterfall that further incites the sponsor to outperform certain metrics, typically around IRR hurdles for any cash out refinance or sale.  

not to get into the math but if your putting in the equity then you need to share upside.it would be more common to have a pref return and a waterfall profit split.