We will underwrite and analyze hundreds of apartment deals before submitting an offer on one that qualifies. It’s important for those passively investing in apartment syndications to understand our General Partner processes. In this series, I’ll go through the typical 5-steps GP’s use when submitting an offer on an apartment deal.


Before completing the underwriting process and submitting an offer, the GP will likely need to reach out to the listing real estate broker and their property management company to answer any questions they have, provide additional information, and/or validate any assumptions being made. Additionally, the GP should visit the property in-person.

Based on the feedback from the real estate broker and property management company, and the in-person visit, the GP should update or revise any underwriting assumptions in preparation for submitting an offer.

Price Discovery

During the underwriting and pre-offer phase, the GP will usually have an idea of the price at which the owner is wanting to sell. For deals with 50 to 100 or more units, the listed purchase price will likely say “to be determined by the market.” If that is the case, the GP can usually get a ballpark number from the listing real estate broker or the owner. If not, then they may use the cap rate and net operating income to get an estimated sales price.

Understand, the sale price an owner desires is fairly irrelevant when determining an offer price. GPs should look to set an offer price that results in projected returns that meet their investment criteria.

In addition to determining an offer price, the GP should also have a conversation with their lender or mortgage broker to obtain estimated loan terms to include in their offer.

Letter Of Intent

If the results of the underwriting meet the investment criteria, the GP will submit an offer in the form of a letter of intent (LOI). The LOI is not legally binding. Its purpose is to show the GP’s intent to purchase the apartment at the stated price and terms, which includes the purchase price, down payment amount, earnest deposit (typically 1% of the purchase price) and the due diligence timeline.

After submitting the LOI, the GP may be invited to a best and final call with the sellers. This is when the sellers ask for the interested investors’ best and final offer. Then, the investors with the most competitive offers will be invited to a call with the sellers, which is basically an interview so that the seller can determine if the investor is capable of closing on the deal.

Formal Offer

If the sellers accept and sign the GP’s letter of intent or they are awarded the deal after the best and final round, the GP will submit a formal offer in the form of a purchase sales agreement. The sales agreement should be prepared by the GP’s real estate attorney. The purchase sales agreement is a fully detailed contract that outlines all of the terms of the sale.

Upfront Funding

In addition to the earnest deposit, other fees paid prior to closing are the upfront bank fees. Since the earnest deposit the GP needs to know where these funds will come from prior to putting the property under contract. The GP may front these costs and reimburse themselves at the close. Another option is for the GP to ask an investor to fund the earnest deposit and upfront bank fees and create a promissory note for paying the investor back if the GP loses the money (which happens if the contract is cancelled after the earnest deposit goes hard). Ideally, the party who funds the earnest deposit will fund the other upfront banks fees as well.

In terms of how much upfront cash is needed, a good estimate is 2.5% of the purchase price (1% for the earnest deposit and 1.5% for the bank fees).

Are you interested in learning more about creating turnkey passive income and generational wealth through multifamily apartment investing?  Visit www.syndicationcapital.net for more information, resources, frequently asked investor questions and our free e-book: How to Passively Invest In Multifamily Apartment Syndications.

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