How to structure tiered profit splits in syndications so investors get 60% of returns between 15-18%, then 50% of anything above 18%, independent of their ownership stake. The method starts by calculating total project return, then allocating portions based on which threshold you hit.
And then if we go over from 15% to 18%, then we're going to do a 60/40 split. And then if we get to a point where it's more than 18%, then we're going to go to a 50/50 split. So that's one way that you can handle that is stagger your returns. And, you know, it doesn't matter the ownership percentage. is usually derived by, like you said, calculating. You start with calculating the overall returns for the entire project. What is the overall return? Once you know the overall return, now you know how much of that you have to get investors— give to investors to give them the annualized return you want them to have.
