White Coat Investor Podcast

WCI #252: Real Estate Q&A with Passive Income MD's Peter Kim

Mar 3, 2022
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ADVICE

Understand Syndication Waterfalls

  • Read each syndication's waterfall and preferred-return terms before investing.
  • Treat refinance cash-outs as return of capital and confirm how equity and splits continue after cash-out.
INSIGHT

Refinance Can Create 'House Money' Returns

  • Getting your initial capital back after a refinance can create 'house money' returns.
  • Your ROI can become technically infinite if you keep receiving distributions after your capital is returned.
INSIGHT

What A Catch-Up Contribution Does

  • A catch-up (Class B) is a mid-waterfall bucket that can route profits to sponsors after LP preferred returns.
  • It can improve sponsor-investor alignment but changes the distribution order and percentages.
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