Where the cash comes from
A distribution starts with rent. Tenants pay rent, the property pays its expenses (payroll, insurance, maintenance, debt service), and what's left over is cash flow. If a property is run well and occupancy holds, there's usually something left over each month or quarter. That leftover is what gets distributed to investors.
This is different from appreciation, which you only see when the property sells or refinances. Cash flow distributions are the ongoing piece, paid out while you hold the investment.
How often distributions happen
Most syndications distribute quarterly. Some, including our properties, distribute monthly once operations are stable. The frequency isn't just a nicety. It reflects how the property is actually performing in real time, and it's one of the clearest signals an investor has that things are on track.
A property that's mid-renovation or working through occupancy problems may pay less, or pause, until it stabilizes. That's not a red flag by itself. It's why monthly reporting matters more than the distribution check. You want to see the full picture, not just the number that lands in your account.
Who gets paid first
In our deals, investors get paid before we do. We earn our share only after investors clear their preferred return. That's the structure: our compensation sits behind yours, not ahead of it. We also put our own capital into every property we sponsor, on the same terms, same waterfall, same timing, same risk as our investors. If the cash isn't there, we don't get paid either.
What affects the size of a distribution
A few things move the number up or down:
- Occupancy. Vacant units don't produce rent. A property leasing up after renovation often shows lower distributions early, then higher ones as units fill.
- Operating expenses. Insurance, repairs, and utility costs can swing month to month. A bad quarter for maintenance eats into what's left to distribute.
- Debt service. The loan payment comes out before anything reaches investors.
- Reserves. Sound operators hold some cash back for the unexpected rather than distributing every dollar.
Projections, not promises
We target 7 to 9% cash-on-cash and 15 to 20% IRR on our deals, but those are targets built on conservative, worst-case-tested assumptions, not outcomes we can assure. Rent growth, occupancy, and exit cap rates are all modeled on the downside case before a deal ever reaches our investors. Markets move, and actual distributions can come in above or below target in any given quarter.
What transparency looks like
We send monthly reports that include what went wrong, not just the highlights. A distribution is a result, and results come from decisions made months earlier, on leasing, on vendors, on capital improvements. If something underperforms, we'd rather an investor hear it from us directly than guess from a smaller check.
Tax treatment
Cash flow distributions are often tax-advantaged due to depreciation, which can shelter a meaningful part of the income from being taxed as ordinary income in the year you receive it. We are not accountants or attorneys, so for anything specific to your situation, talk to your own tax advisor.
If you want to see how this plays out across actual holdings, explore our portfolio, or schedule a call with John to walk through the assumptions behind a current deal.