Learning Capital Stacking

[Rose Hernandez]

Aloha Everyone!!,

I’m based in Hawaii and currently looking to acquire small multifamily properties. Recently, I started learning about capital stacking and would love to connect with investors who have experience using this strategy.

For those who have done capital stacking, what were some of the biggest pros and cons you encountered? Any lessons learned, challenges, or advice would be greatly appreciated.

Mahalo in advance!

[Chris Seveney]

How do you define capital stacking? 

Capital stacking or a capital stack is where you have priorities in the funds you get. For example a first lien note is at the bottom of the stack (First in line), then after you may have equity, which is your money or investors money. There are ways to break that up. 

Not sure what you mean by pros and cons, just realize leverage is an accelerant that can either accelerate returrns or losses - there is a post on here about losing $15M in investor money because they gave property back to bank