Episode 30: Distributions 101 – When & How You Get Paid

Building Passive Income

00:00 / 00:17:50

Welcome to Building Passive Income with CREI Collin

When do I actually get paid? In this episode, CREI Collin breaks down distributions—the two types (cash flow and proceeds), how distribution frequency works, what affects distribution amounts, how proceeds distributions work at a sale or refinance, and how to evaluate whether a deal’s distribution profile matches your investment goals.

In This Episode, You’ll Learn:

• The two types of distributions: cash flow distributions and proceeds distributions

• How distribution frequency works: quarterly, monthly, semi-annual, or none during hold period

• What affects distribution amounts: property performance, reserves, debt service, and waterfall structure

• How proceeds distributions work at a sale and how the waterfall applies

• How refinance distributions work and the benefits and risks of higher leverage

• How to evaluate whether a deal’s distribution profile matches your goals

Key Topics Covered:

[00:00] Introduction Why understanding when and how you get paid is critical to evaluating syndication deals

[02:20] The Two Types of Distributions Cash flow distributions from operations vs. proceeds distributions from sale or refinance

[06:30] How Distribution Frequency Works Quarterly, monthly, semi-annual, annual, or no distributions during the hold period

[10:40] What Affects Distribution Amounts? Property performance, reserve fund usage, debt service, capital improvements, waterfall structure, and GP decisions

[15:20] How Proceeds Distributions Work at a Sale Walking through the six-step process from sale closing to distribution issuance

[20:10] Refinance Distributions – Returning Capital Without Selling How refinances work, the benefits of de-risking, and the risks of higher leverage

[24:30] Evaluating Distribution Profiles – Does This Deal Match Your Goals? How to match distribution profiles to your goals: passive income, appreciation, balanced, or retirement account investing

[28:10] Recap and Action Steps How to evaluate distribution frequency and profiles in your next syndication deal

Key Takeaways:

✅ There are two types of distributions: cash flow distributions from operations and proceeds distributions from a sale or refinance

✅ Distribution frequency varies—quarterly is most common, but some deals distribute monthly, semi-annually, or not at all during the hold period

✅ Distribution amounts depend on property performance, reserve fund usage, debt service, capital improvements, waterfall structure, and GP decisions

✅ At a sale, net proceeds are distributed based on the waterfall—the exact order of preferred return and return of capital varies by the operating agreement

✅ Refinance distributions return capital to investors without selling, but they increase the property’s debt load and should be evaluated carefully for covenant and cash flow risks

✅ Evaluate whether a deal’s distribution profile matches your goals—if you need passive income, prioritize deals with regular cash flow distributions; if you’re focused on appreciation, value-add deals with proceeds-focused returns may be a better fit

Resources Mentioned:

• CREI Partners: CREIPartners.com • Schedule a Free 30-Minute Consultation: Let’s Talk • Passive Investor Coaching: PassiveInvestorCoaching.com

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Disclaimer:

This podcast is for educational and informational purposes only and does not constitute legal, tax, or investment advice. Always consult with a qualified CPA, attorney, and financial advisor before making any investment decisions.

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