ANSWER

Whether a sponsor invests his own money in the deal depends from deal to deal. In an ideal scenario, both the sponsor as well as the limited partners pool their dollars together so that their interests are more deeply aligned. It’s best to participate in syndications where the sponsor has a financial vested interest in the deal as this will create more of an imperative on the part of the sponsor for the syndication to succeed. When the sponsor invests with dollars (versus sweat equity alone), the split may change to reflect both the investment of time as well as the financial stake the sponsor has in the deal. For example, if the split is 70/30, and the sponsor adds their own money to the deal, he increases his stake so the split may change to 60/40, with 60% to the limited partners and 40% to the sponsor.

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