[[Internal rate of return (IRR)|IRR]] dwindles as hold periods get longer. A [[Preferred return and promote|promote]] is a proportion of IRR (at least, after clearing the preferred return) that goes to the sponsor. Therefore, sponsors compensated partially by a promote maximize their income by selling ASAP. Because my goal is to develop great coliving houses and hold them forever, a promote is incompatible with my goals. **It'd be better to use any capital beyond the preferred return to pay back investor capital**. Source: [Moses Kagan](https://kagansblog.com/2018/04/long-term-holds/). #Question: this structure allows for an 8% IRR but none of the upside from appreciation. It's arguably less risky than a regular real estate deal because LPs get capital returned sooner. How easy or difficult would it be to raise capital with such a structure?