Multifamily Housing Real Estate Syndicates - Continued...

distribution that is based upon our proprietary earnings modeling and syndication program approach.

The investors provide $2,891,304 in equity capital for both of the investments.  This means a total project budget of $10,891,304 shall pertain to both projects.  

Acme Development Company and ABC Development Company are both sponsoring multifamily real estate syndicates that render essentially identical costs of $10,891,304 to develop, construct, market and operate to a point of fully stabilized occupancy; a period of 18 months.

Now we can look at the returns...

ABC Development is paying a 7% dividend to its investors.  This means the investors will receive a 7% return for the first 12 months and 3.5% for the remaining 6 months of the holding period for a total return of 110.50%; or, $303,587 in distributions plus the original investment of $2,891,304 and the savings of $520,435 due to the 1031 exchange for a total yield of $3,715,326.  $3,715,326 in distributions work out to a gross yield for the investment of 128.50%.

The Acme Development Company pays out investors based upon a waterfall distribution plan.  It receives the same $2,891,304 of original capital investment plus it receives its share of the distributable income of $1,555,901, an additional $520,435 in capital gains savings for a grand total of $4,812,050 in distributions that work out to a gross yield for the investment of 166.43%.

Distributions of $4.8 million versus distributions of $3.7 million.  Same project costs.  Same earnings opportunity.  Different result that is more than 20% higher than the typical approach.  That's your money talking to you and it wants to know why you aren't ready yet to make your play^sm.