Need advise on private money deal

[Jonathan Peters]

I have a project I am putting together for a 24 unit apartment complex. What is the best way to approach and structure a deal for private money lenders for financing the project? I have not used private money before and want to be fair and profitable for both parties. I already have two potential investors to approach. 

I bring to the deal.

Land for multifamily buildings.

Oversee all aspects of the building process

Oversee property management 

[Chris Seveney]

Quote from @Jonathan Peters:

I have a project I am putting together for a 24 unit apartment complex. What is the best way to approach and structure a deal for private money lenders for financing the project? I have not used private money before and want to be fair and profitable for both parties. I already have two potential investors to approach. 

I bring to the deal.

Land for multifamily buildings.

Oversee all aspects of the building process

Oversee property management 

Start with what does the capital stack look like? If you are buying a $5M complex a bank typically will not let more than 65-70%. So let's say you may qualify for a $3M loan. How are you getting the other $2M? 

If you skip the banks all together, not going to get you much further as no private money lender will lend the entire amount, and if you get multiple lenders then you have those in 2nd or 3rd position which many will not do.

You can raise equity. If you do that, then you will need to put together a syndication and outline the entire terms of the offering. If it is one investor then you could make it a lot simpler but the moment you get multiple investors and pari passu the funds then it gets a lot more complicated.