How much EMD should a Syndication put down?

Question

Hello everyone!

I have a few questions.

1. How much emd should a syndication put on a deal when there’s a lender involved?

2. How much time is between the signing of PSA and closing? (Asking to see how much time one really have to raise capital)

3. Do the commercial lender consider the EMD as apart of your down payment? (Never dealt with a lender, always paid cash on my residential flips)

4. Can you explain the process from finding a deal, psa, due diligence, and closing..

Thanks!

Brian Burke · Answer

Typically around 1% of the purchase price within 3 days of signing PSA.  The percentage might be higher on smaller deals, say under $10 million maybe it’s a bit over 1%. Then you’ll also need a lender deposit for third party reports and sometimes an app fee. These can be $50K or so, depending on the size of the loan.

Tj Hines · Answer

@Joe Miles

1. How much emd should a syndication put on a deal when there’s a lender involved? (Typically 1-2% of the purchase price is what we will submit on the LOI)

2. How much time is between the signing of PSA and closing? (Asking to see how much time one really have to raise capital)  ((60 days from the time you sign PSA to closing))

3. Do the commercial lender consider the EMD as apart of your down payment? (Never dealt with a lender, always paid cash on my residential flips) ((No, the EMD is essentially just a good faith deposit that you will perform under contract. The EMD will go towards the purchase price))

4. Can you explain the process from finding a deal, psa, due diligence, and closing.. (Connect with brokers that specialize in the multifamily space. Underwrite deals till you can find one that pencils. Submit an LOI with a 30 day DD clause and 60 day closing)

Yannik Cudjoe-Virgil · Answer

1 - Typically you can expect around 1% EMD. But may need to go hard day 1 with a larger amount in a hot marker.

2 - From a signed PSA to close is about 60-90 days.You need to have your money primed before your PSA. Don't wait until you have a deal under contract to raise money

3- Yes. Your EMD is part of the downpayment.

4 - That is a very detailed process. You should read Joe Fairless's book on syndication as it was mentioned in a previous post.

Greg Dickerson · Answer

@Joe Miles the EMD is part of the down payment. The more you put up the more serious you look.

Due diligence period depends on the deal and the seller. The more competitive the deal the faster they will want to close.

Bottom line is offer what tens and deposit you are comfortable with but you have to show up strong on competitive deals.

Chris Tracy · Answer

Hey Joe... Have you read Joe Fairless's book on syndications?

How much EMD should a Syndication put down?

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