We recently asked a group of active investors a few questions. We received a lot of really great responses and picked one of our favorites to share with you.
The question we asked was this…
In multi-family syndication, what are the best ways to structure most deals if I’m the “syndicator” bringing the investors together? Is there a specific fee I can / should charge upfront and are there any guidelines for what’s “fair” for the management fee on a month to month basis?
Jillian Sidoti’s response:
First, you need to make sure you are doing this properly under SEC rules and guidelines. Failure to do this very important part can kill you. As far as fees are concerned, there are multiple types of fees that you can take. Our firm often see a 1-3% due diligence fee that can be based on the asset that is being syndicated. You can not take a commission, per se, as this is a violation of broker-dealer rules if you are not a licensed broker-dealer. You could also take an asset management fee, a monthly management fee (based on rents), disposition fees, and percentage of the profits.
Jillian Sidoti is a securities lawyer that specialiazes in private placements for the real estate industry as well as being a real estate investor herself.
