Our investment strategy page explains our approach and return goals, however; every deal is different. Normally, cash-on-cash (COC) returns fall in the 8%-10% range with an Internal Rate of Return (IRR) of 15%-20%.
Real estate syndication deals are waterfall structured to provide the limited partners with a preferred return or hurdle rate; typically around 8%. After the preferred return is met, there is a split, normally; 70/30, 60/40 or 50/50 (limited partner/general partner).
The preferred return favors the limited partner. The first 8%, typically, return on an investment, goes entirely to the limited partners. Once the preferred return is achieved, all other proceeds from distributions or capital events are split in a distribution waterfall.
The split might change if a certain hurdle rate is achieved. For example; a PPM might state an 8% preferred return, followed by a 70/30 split and any returns over 18%, will be split 50/50. This distribution waterfall scenario incentivizes the general partners to meet or exceed projections.
The split(s) are determined on a deal per deal basis and are clearly stated in both; the PPM and the investment offering.