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ForumsArrowCreative Real Estate Financing ForumArrowSeed capital compared to Mezzanine funding in real estate
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Seed capital compared to Mezzanine funding in real estate

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user profile avatar
  • Posts 33
  • Votes 11

Tyler Horton
from New York City, NY

posted almost 2 years ago

What is Mezzanine Funding in REI? How does it compare to Seed Capital?

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  • Posts 683
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Jonathan Twombly
Rental Property Investor from Brooklyn, NY

replied almost 2 years ago

@Tyler Horton Mezz debt is typically a second position on an asset to raise the leverage on the deal and raise returns to equity.  Interest rates are very high because a second portion is essentially worthless if you default on the first position debt.  In a foreclosure in the first position debt, the mezzanine debt will be wiped out.

What do you mean by "seed capital"?  Are you talking about the equity downpayment on the asset?

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  • Posts 41
  • Votes 20

Joshua Greenberg
from San Francisco, CA

replied almost 2 years ago

Well, I am pretty sure that Mezzanine funding is for building a mezzanine in between two floors. Seed capital is a totally different story, that is the money you use to buy seed for your lawn. 

Jokes aside, I am fairly certain that a quick google search will confirm Jonathan Twombly's assessment of mezzanine debt as accurate.

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  • Posts 912
  • Votes 329

Steven Gesis
Developer from Cleveland, OH

replied almost 2 years ago
Originally posted by @Tyler Horton :

What is Mezzanine Funding in REI? How does it compare to Seed Capital?

 Tyler, I think mezz is covered fairly well in this forum at this point - but when you say seed capital ? What specifically is the application ?

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Lane Kawaoka
Rental Property Investor from Honolulu, HAWAII (HI)

replied almost 2 years ago

Does anyone invest in mezzanine debt? Seems fascinating.

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  • Posts 39
  • Votes 25

Account Closed

replied over 1 year ago

I have tried to invest in Mezzanine funding, however it seems to complicated to me. Is this a good fit for beginning investors?

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  • Posts 28
  • Votes 12

Jack McTavish
Flipper/Rehabber from Portland, OR

replied over 1 year ago

@Account Closed That is quite fascinating, do you have a lot of experience investing in this type of funding?

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  • Posts 17
  • Votes 0

Craig Baker
Real Estate Broker from Alton, Illinois

replied 12 months ago

 @Jack McTavish   I tried in my early investment reals. Mezzanine isn't a good funding fit for junior investors. There's a lot involved. Personally, I wouldn't go back to it.

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  • Posts 15
  • Votes 3

Flor Santana
Realtor from Charlotte, NC

replied 4 months ago

@Craig Baker , can you tell us a little more about your experiences with Mezzanine funding?

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  • Posts 26
  • Votes 12

Austin Soros
from Detroit, Michigan

replied 5 days ago

Jonathan Twombly said it well. Mezzanine funding isn't for the faint of heart. It's a more advanced concept, so stay away unless you understand the ins and outs. 

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