In real estate syndication, how are profits typically distributed?

In real estate syndication, profits are typically distributed based on the percentage of each investor's contribution. This method aligns the distribution of profits with the level of investment that each participant has made in the syndicate. Each investor's share of the profits corresponds to the proportion of their financial commitment relative to the total investment.

For example, if an investor contributes 20% of the total funding for a project, they would receive 20% of the profits generated from that investment. This approach encourages fair participation and investment, allowing investors to benefit proportionately from their stake in the venture.

The other options do not reflect standard practices in real estate syndication. Equitable distribution regardless of investment amount would undermine the incentive for investors to contribute more capital. Limiting profit distribution solely to managing partners would exclude other investors who have also put capital into the project. Finally, tying profits only to property appreciation ignores rental income and other revenue streams that contribute to overall returns for investors.