If they can't get their cap rate they simply convert to a permanent loan (take out some of the created equity through development) and hold for the right time in the next cycle to sell. 

The second major difference may be something  you've yet to experience if your investing career has not yet spanned an entire real estate cycle. 

if a fund goes under its a NIGHTMARE of epic proportions for the limited investor.. so you want to make sure that your leader of the fund is Very experienced been doing it for many years and has a significant portfolio and even best has been through a cycle.. 

before calling it in, or you risk starting the cycle all over again.

I suggest you WAIT until we get back to a Buyer Cycle I and II and then ride the Seller Cycle I and II wave next time around.

The only thing I had to do was make sure I had enough paper loss to offset all of the gains and had to make sure it was done in the same calendar year.I continue to use the strategy - when deals go full cycle, I invest in a new syndication. 

And these waves repeat, in cycle, over and over and over again.

I’ll also add that it depends on the real estate cycle you’re in.

I think it also depends on timing and where you are in the real estate cycle, and how long to CO for a particular home being considered for this option.

How much experience does the sponsor have, how long have they been in business, how have their deals performed (and do they even have any full-cycle deals), what have they done when things didn’t go according to plan—all of those are topics to explore.