This is a long thread so I may have missed it if this was already discussed
Does anyone here have experience investing in a real estate deal for an apartment complex ($15m+, 200+ units), where they offer a preferred return and then an equity split?
What is standard for the preferred return and equity split?
What are some of the things to look at to see if its a good deal?
What are the biggest risks with these types of investments?
I've heard conflicting things on the tax benefits of investing in this type of real estate, are there any?
Any other questions I should be asking?
I work on the "other" side, the syndicator side so I can give you the "inside scoop."
First of all, the rule of thumb in real estate is that there are no rules. Simply because every parcel of real estate is unique. However, there are certain standards in each market and asset class. My experience is from a secondary/tertiary market, Class B- through A.
As far as how much syndicators take, many have become sophisticated over the years and set-up increased percentages based on stronger performance. On a simple level, I see a lot 7 or 8 percent pref and then a 70/30 split. Additionally look out for fees that are taken, on acquisition and on property management/asset management.
To see if something is a good deal is to evaluate the risk/return ratio and your appetitive for risk. There really is no short-cut here.
Typically these investments are very tax beneficial as even a good property, distributing funds will have a negative profit for tax purposes.