CalculateRealEstateROI

Multifamily

How does a syndication waterfall work?

Sequential profit splits: return of capital → pref return → split → IRR hurdles → promote.

Reviewed by Keiron Brown, Founder & Editor, CalculateRealEstateROI · Educational estimates only — not investment, financial, tax, or legal advice

Direct answer

Sequential profit splits: return of capital → pref return → split → IRR hurdles → promote.

Expanded explanation

Typical: 8% pref → 70/30 LP/GP → 15% IRR → 60/40 → 20% IRR → 50/50.

Examples

  • $10M equity, 18% IRR: LPs hit 15% hurdle, GP earns promote.

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