Advanced Deal Structures All Passive Investors Should Know

Passive Real Estate Strategies

Are you looking to understand the ins and outs of passive real estate investing? In this episode, Justin will be discussing the different deal structures and capital stacks associated with syndication deals. He will discuss Preferred Equity and Preferred Return, two terms that are often used interchangeably but mean slightly different things. He will also discuss the use of waterfalls and hurdles, as well as the catchup pool in a waterfall distribution system. This discussion is designed to help career driven individuals understand passive investing so they can take advantage of these opportunities and determine if it is right for them. Tune in now to gain insight into the world of passive real estate investing!

Key Highlights:

[00:01 - 08:54] Uncovering the Extensive Process Behind Syndication Deals: What Goes Into Bringing a Great Deal to Investors?

• If a property performs as projected or exceeds projections, investors not in the preferred equity pool will make a greater return

• Return of capital needs to be returned first 100% before paying out any distributions

• General partnership had a guarantee of $50,000 in returns per year over a five year period

• GPS get paid out a greater share of profits as property is more successful

• Complex structures should be reserved for sophisticated investors

Key Quotes:

"By doing our physical inspections, that means we're bringing in more contractors, we're bringing inspectors, engineers, or anything else that the property needs." - Justin Moy

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