finding a Key Principal process

[Jason Malabute]

I'm working on my first apartment deal. I might need a key principal if purchase price /loan amount is above a certain amount.

I was told I should start looking for a key principal well before I find deal. Is this true?

Based on my research the KP will want 10-50% of the GP which I am fine with. Also, the KP would want more control of deal which is something I would negotiate and workout. 

How do I (as the person) putting the deal together verify that the KP candidate is an actual high net worth individual and can close on deal? What should I ask from them to verify they are a good fit for the KP.

I read that the KP's biggest risk is if I file bankruptcy and they become personally liable for the loan and get sued by the LPs. So what can I expect the candidates to ask from me before taking the KP position?

How long should the "dating" period be before you make your decision on KP

Lastly, where is the best place to find a KP: a) BiggerPockets b) REmentor (will cost $3k) c) personal referral/other ?

https://rementor.com/secure/ev...

[Aaron W.]

@Jason Malabute It will make life much easier if you find a KP early or before you need one. It really can be someone with experience, balance sheet, or net worth, etc. depending on what you need of them. Depending on the amount of work you need the KP to do, then they will request more equity. 

When speaking with the KP, you will need to know what their experience level is and balance sheet/net worth if they are signing on the loan. 

There is no length on how long to "date" the KP before moving into a deal. You'll want to find one that you can get along with and who brings value to the partnership.

You can find potential KPs almost anywhere including the places you listed. Many experienced RE professionals are willing to jump on as KP if they know, like, and trust you, and you bring a good deal.

Best of luck!