Would You Fund This Deal Structure in Today’s Market?

Question

We’re launching a capital group focused on 200+ unit acquisitions across the Southeast. Our construction edge gives us real cost control, but we’re pressure testing the fund model before going live.

High level: 3-tier equity stack, 8–12% preferred returns, bonus equity participation, and full refi payback before we start waterfalling splits.

Here’s what I’d love insight on from experienced LPs and GPs:

• Does this align with what’s actually working right now?
• What would you tweak if you were writing the check?
• What blind spots would kill this on first glance?

Does this align with what’s actually working right now?

What would you tweak if you were writing the check?

What blind spots would kill this on first glance?

I’ve read the threads, done my homework—but nothing beats hearing from the people building and investing daily.

Appreciate any and all feedback. DMs welcome too if you’d rather connect directly. Thanks in advance for your feedback.

Chris Howell · Answer

@Daniel Sehy
I’m working through a unique structure right now and trying to build something that’s truly investor-first and fully aligned with LPs. I’ve put a lot of thought into what I’d want if I were the passive investor and build my structure around that.

That said, it’s still tough to know what really makes someone jump into a deal with confidence. I’d love to hear more about how you structure your deals — specifically:

• When do you plan a refinance?
• What equity participation do your LPs receive and how would they earn it (and what do you as GP keep)?
• How much capital are you usually raising vs. the purchase price?

I’m still learning and refining my model — I’ve always been a solo operator using traditional bank financing, so this equity-funded approach is new territory. Appreciate any insight you’re willing to share.

Frank Pyle · Answer

Daniel, thanks for posting—this is a solid structure, especially the full refi payback before waterfall splits. That’s a smart alignment move in this market.

The 8–12% preferred return is competitive and realistic, assuming the deal supports it. Bonus equity participation is a nice upside hook, but I’d make sure it’s clearly defined—LPs want to know when and how that bonus kicks in.

Biggest thing that could raise red flags: vague or untested assumptions about timing on refi. If it takes longer than expected or rates don’t cooperate, that could delay returns or erode confidence.

If you can show clear cost control from your construction edge and have a well-underwritten path to stabilization, this should get attention.

Would be happy to connect or review further if helpful.

Daniel Sehy · Answer

@Frank Pyle  really appreciate you jumping in. Super helpful. Totally agree on the refi risk — that’s one area we’ve been pressure testing hard. Originally modeled a 12–18 month refi, but we’re now framing it more realistically as 24–36 months, with underwriting padded to 40 to avoid any surprises if the market shifts or stabilization takes longer.

Our construction edge gives us speed and cost control, but we’re being disciplined about assuming nothing goes perfectly.

We also took your note on bonus equity to heart. Right now we’re carving out a clear kicker structure — tied to full capital return, above-preferred yield targets, and a defined exit or recap event. Just ironing out the % bands now.

Let me know if you’d be open to reviewing the tier waterfall and timeline once it’s finalized — would value your take before we lock it in.

Thanks again — this kind of feedback is exactly why I’m here.

Chris Howell · Answer

@Frank Pyle

I would like to email you about a structure I am trying to build that is investor First Structure.  I would love to get feedback on where its weak and what you like about it.   Any feedback for a guy new trying to raise money but have 23 years of SFR.

Would You Fund This Deal Structure in Today’s Market?

Most Popular Reply