$4,800 for an LP agreement review and I still got diluted out of $61k
A 96-unit value-add deal in a southeast secondary market, $150k in for 4.1% of the LP class. I did what I tell everyone to do and sent the PPM, the LP agreement and the subscription docs to a real estate attorney a broker referred me to. Engagement letter said "review of offering documents and summary of material terms." Flat $4,800. I got a clean six page memo eleven days later.
The memo was accurate. It was also a summary. Three things in the documents that mattered were mentioned as facts and never flagged as risk. Capital calls were permitted at the manager's discretion with a dilution formula that reduced a non-participating member at roughly twice the pro rata rate. Amendments to the LP agreement needed a majority of interests, and sponsor affiliates held enough of the class to reach that majority on their own. There was no LP removal right at any threshold.
Month 19, rate cap renewal came in higher than the model, and a $2.1M capital call landed with a 21 day window. I passed. My 4.1% became 1.5%. On the eventual refi valuation my share of equity went from about $186k of implied value to $118k, and against my basis I am down $61k and change with no exit until they sell.
What I'd do differently. I'd scope the engagement as a written risk list against named issues rather than a review of material terms, and I'd say out loud that I want the dilution mechanics, the amendment threshold and the removal provisions answered in that order. I'd ask whether the attorney does private placement work regularly or handles closings. And I'd ask the question I never asked, which is whether any of it was negotiable at my check size, because if the answer was no then $4,800 bought me a decision and I should have treated it as one.