General Structure

• Preferred Return: This is at 10% but can accumulate if the investment needs to complete certain projects. The accumulated returns will be paid on a sale or refinance.
• Equity Split: 70% to LP and 30% to GP
• Cash Flow Split: After the 10% Preferred Return is paid, the cash flow is split 70% to the LPs and 30% to the GPs
• MHCI Group Fees: 3%: 2% is for an Acquisition Fee and 1% is for the Debt Placement

Equity Splits

• Equity Split: 70% to the Limited Partners and 30% to the General Partners
• Equity Payout: The limited Partners (LPs) get a 100% return of capital before the General Partners get a return
• Example: Purchase a property for $1,000,000. The property increases in value to $2,200,000. The LPs get their $1,000,000 first and the $1,200,000 gets split 70% to the LPs and 30% to the GPs. The LPs would receive $840,000 of the $1,200,000 gain and the GPs would receive $360,000

Cash Flow Splits

• Cash Flow Split: The cash flow is split 70% to the LPs and 30% to the GPs after the 10% Pref is paid in full
• Example: The LPs put $100,000 into a deal. The first year the investment pays $8,000 in distributions to the investors with is $2,000 less than what the $10,000 that should have paid. Meaning there is no split of income. Year 2 the investment does $15,000 in cash flow which $12,000 goes to the LPs ($2,000 from year one and $10,000 from year 2) and the $3,000 left over gets split 70/30.