Again, other might feel differently here.b) Skin in the game: as a conservative investor, I understand that the dirty secret of industries that the waterfall compensation is in the line with me and incentivizes sponsors to take more risk.

Depending on how the waterfall is structured, the preferred return holders will have first rights to the cash flow, typically an asset manager fee is the only component paid before the preferred share holders.

This is called a “waterfall”.

I know in move waterfall model First Tier is always capital contributions.

What I found helped a lot in understating waterfalls, was setting up the spreadsheets from scratch.

I have seen one that essentially has a 20% pref (if you invest enough), but no upside in the deal.I would search around for syndication structures, waterfalls, syndication fees, etc.  

We don't charge any additional development fees or give any preferred returns or waterfalls.

Looking at the base cabs and waterfall island countertop, did you spend some time on GW?

The split can be a fixed ratio, say 60/40 or it can have a waterfall structure where the ratio changes more in favor of the GP the higher the returns are.

I suggest creating a few models (including waterfall) and running it by a few experienced deal sponsors to get a feel for which direction to go to.Best!