Investing in Multifamily Syndications: What to Ask

By Holly Williams

by ELYSIAN Magazine

In my last two articles, I shared a bit about how private investing, specifically in cash-flowing multifamily apartments, changed my life. My company,, is all about helping others – especially Elysian readers – to do the same. I work tirelessly to find multifamily projects (syndications) that make sense financially, and then I make sure that people know about them and have an opportunity to participate. 

In syndications, General Partners do the work and invest money. Limited partners simply invest, share in the profits, and don’t have to worry about financing, property upkeep, or deal with tenants.

However, there are five primary elements that you should be comfortable with before investing in a multifamily syndication, and there are some standard questions that you should ask. This list is applicable to most other investment opportunities, public or private.

This checklist includes: 

  • The Team
  • The Business Plan, Including Exit Strategy 
  • The Asset Itself
  • The Market and Submarket
  • The Fees and Distributions


As a Limited Partner, you are entrusting your capital to the General Partner team. The GP is responsible for every aspect of the project from finding the deal, securing the financing, forming the investor group, and providing ongoing management and communication with investors. It is important to do your own due diligence on that team, and that you get to know them and are confident that they will be good stewards of your investment. Ideally, they should have a few real estate successes under their belt. At the very least, the team should include underwriters, property managers, and brokers who have significant multifamily experience. 



Our team focuses on capital preservation as the number one priority, and cash flow as number two. Then we force appreciation by enhancing the property and creating operational efficiencies that raise the net operating income of the asset. 

There should be a clear timetable of the specific business plan execution and liquidation of the asset. The project should have long-term financing, sufficient reserves, and conservative underwriting assumptions designed to weather a down-cycle in the market. Any rent increase assumptions should be realistic based on the surrounding market. 



Is it a Class A luxury property, a Class B working-class property, or a C or D affordable housing or low-income property? What is the tenant profile?

The GP team should be clear on the market niche that the property is filling now, and where it will be after the business plan is executed. Any multifamily investment that is focused on cash flow, unless it is completely vacant, should make money from day one, or at the very least have pre-commitments to achieve positive cash flow relatively quickly. 



What are the population growth trends and the demographic profile of the area? 

Is the city or state “investor friendly”? 

What types of businesses are nearby, and are new businesses continuing to move to the area?

Company headquarters, hospitals, retail stores… Are there plenty of current and future job engines? 

Is the property near transportation? 

Is the property near major intersections, park-and-ride lots, bus, and train lines? 



Limited Partners receive an ongoing portion of the profits via what is called a preferred return. That essentially means that the LP is in the first position to receive distributions, and the GP does not get paid until after the LP has received the preferred return of typically 6% to 10%, depending upon the size of the deal. After the preferred return is paid, the profits over that amount are usually split between the LP and GP. 

Most GP teams evaluate scores of potential projects before finding one that is a solid deal for their investors. The fees for lawyers, accountants, underwriters, and brokers typically start around $30,000 and go up from there depending on the size of the project. These costs can either be built into an overall acquisition fee, or the team may charge both an acquisition fee and/or a separate fee for organizing the deal. These fees typically run between 2% and 5% of the purchase price. 

There is a monthly or quarterly fee paid to the GP for managing the asset and implementing the business plan. I look for the management fee to be around 2% to 3% of the net operating income, that way the GP is incentivized to focus on increasing the Net Operating Income (NOI) as much as possible. My team does not collect any asset management fees until the limited partners are paid their preferred return. 

At the end of the day, whether to invest in a particular deal comes down to your personal financial goals, your current financial assets and how they are deployed, and your comfort level with the elements above. Feel free to visit my website to learn more!

Holly Williams is the principal of

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