How it works
You put in capital. We do everything else. Here is exactly how the money moves.
Real estate syndication is a group of investors pooling capital to buy a property that none of them would buy alone. The structure is standard and the mechanics are not complicated — but they are worth understanding line by line before you wire anyone money.
Who is who
You — the limited partner (LP)
You contribute capital and nothing else. You have no management responsibility, no personal guarantee on the loan, and no liability beyond the money you invest. You also have no day-to-day control — that is the trade.
Us — the sponsor / general partner (GP)
We find the deal, underwrite it, negotiate it, sign and guarantee the loan, run the renovation, oversee the property manager, handle reporting and taxes, and eventually sell it. We also put our own money in alongside yours.
The lender
A bank or DSCR lender provides the mortgage, secured by the property. Their loan gets paid before anyone else sees a dollar. They typically require a personal guarantee — which we sign, not you.
The lifecycle of a deal
We find and underwrite a property
We run every deal through the same model: rent roll, expenses, debt sizing, DSCR, cash flow, and exit. Most deals fail here. We publish the failures alongside the deals we buy.
We publish the deal package
Purchase price, how much equity investors bring, how much debt we apply for, the rent estimate, the fee schedule, and the full distribution waterfall — before you commit anything.
You review and express interest
Non-binding. You get the private placement memorandum, the operating agreement, and the subscription documents. Your accreditation is verified by an independent third party.
The entity closes on the property
A single-purpose LLC is formed to hold title. Investor capital is wired to escrow, the lender funds, and the property is acquired. You become a member of the LLC.
We operate the asset
Turn the units, reprice the rents, oversee the manager. You receive distributions when cash flow allows and a K-1 each year for your taxes.
We sell or refinance, and capital comes back
At the end of the hold, proceeds pay off the loan, return your capital, pay any accrued preferred return, and split the remaining profit.
The waterfall
How every dollar gets distributed, in order
“Waterfall” just means priority order. Money fills each tier completely before any of it spills into the next. The sponsor sits at the bottom on purpose — we do not participate in profit until you have received your preferred return and your capital back.
- 1
The lender is paid
LenderMortgage principal and interest come out of operating income before anything is distributed. If there is no cash left after debt service, there is no distribution that year.
- 2
Investors receive the preferred return
You (and sponsor co-invest)An 8% annual return on your invested capital, paid before the sponsor participates in any profit. If cash flow cannot cover it in a given year, the shortfall accrues and must be paid out of later cash flow or sale proceeds before the sponsor earns a promote.
- 3
Your capital is returned
You (and sponsor co-invest)On sale or refinance, proceeds first repay the loan, then return 100% of contributed capital to investors before profit is split.
- 4
Profit above that is split 70 / 30
70% you / 30% sponsorEverything left over after the preferred return and return of capital is split 70% to investors, 30% to the sponsor. This 30% is the "promote" — it is the sponsor’s actual upside, and it only exists if the deal performs.
A worked example. You invest $100,000. In a year the deal distributes $12,000 of cash flow. The first $8,000 is your 8% preferred return. The remaining $4,000 splits 70/30 — $2,800 to you, $1,200 to us. You received $10,800 that year, a 10.8% cash-on-cash return, and we received $1,200 only because the deal cleared your pref first.
What the sponsor charges, and when
These are our standard terms. Every deal page restates them with the actual dollar amounts for that specific property, because a percentage is easy to skim past and a dollar figure is not.
| Fee | Standard rate | When | What it pays for |
|---|---|---|---|
| Acquisition fee | 2% of purchase price | Once, at closing | Compensates the work of sourcing, underwriting, negotiating, and closing — months of effort that happen before a deal exists. |
| Asset management fee | 1% of effective gross income | Annually | Ongoing oversight: manager supervision, budgeting, lender reporting, investor reporting, tax coordination. |
| Disposition fee | 1% of sale price | Once, at sale | Managing the sale process. Charged on the way out, and only if there is a sale. |
| Promote / carried interest | 30% of profit above the pref | Only after investors are paid | The alignment mechanism. If the deal does not clear the preferred return, this is zero — which is exactly the point. |
| Property management | 8% of effective gross income | Monthly | Paid to a third-party manager for leasing, rent collection, maintenance and tenant relations. This is not sponsor income. |
We invest alongside you
The sponsor funds 10% of the equity from its own capital, in the same position and on the same terms as every other investor. If the deal loses money, we lose money first-hand, not just in foregone fees.
The documents govern
Everything on this page describes our intent in plain language. The private placement memorandum and operating agreement are the binding versions, and where they differ from this page, they win. Read them.
See it applied to a real property
Every concept on this page — sources and uses, DSCR, the pref, the promote — is shown with real numbers on our deal pages, including the deals that did not clear our underwriting.