GettyOne of the hallmark features of a multifamily real estate syndication is the “equity waterfall.” While the concept is simple, the construction of the waterfall itself is often a source of confusion for our students and investors. What Is An Equity Waterfall? There may be multiple “classes” of LPs, whose claims on property cash flow have different levels of priority. These may be netted from property cash flow and reduce the overall return for the LPs. The same thing happens with property cash flow, and the rules described above are what dictates how the “water” flows into the lower pools.

Source: Forbes May 28, 2020 11:37 UTC