b'Offer Lower Preferred Returns Until Stabilization I once asked a representative from a large multi-family syndication company that has billions in assets under management whether they do 8% preferred returns, and their response was; We dont offer 8% returns in the first 2-3 years, during the stabilization process. During that time, we offer 5 or6%returns,andthengoto8%afterstabilizationandrefinance. Something for you to consider. That way you dont have to go back and make up arrearages.Limit Preferred Returns to the Fist 1-2 Years Another option is to consider a preferred return that only lasts for 1 or 2 years; after which it goes to a straight split.Place Caps on Investor Returns Another common option is to cap investor returns such that once all of Class As capital contributions have been repaid and they have received an annualized return of a pre-determined percentage, such as 18%, the split changes to 50/50 or even flips, so that from then on, its 30/70.A Word on Buying Out Investors on Refinance Investors dont like this. Clients have tried this in the past, and come back to tell us, investors hated it and wouldnt invest with them again. Its better to cap investor returns, change the split and leave them in the deal, than it is to cash them out on refinance, while you get the windfall of owning the property that your syndicate or fund bought with their money.216'