Investor · Bowling Green, KY · Member since 2023 · 73 posts · 22 votes
Hey everyone,
I have a stabilized 10-unit under contract in Louisville. I’ve secured financing with Stock Yards Bank (Term sheet in hand, 6.75% fixed).
I am bringing in a Key Principal (KP) to sign on the loan to satisfy the balance sheet requirements, but I want to make sure I offer a fair split.
The Question: For a standard KP who is only signing on the debt (no operational work), what kind of GP equity or fee are you seeing in this market? Is 10-20% standard, or is that too high/low?*
I have a stabilized 10-unit under contract in Louisville. I’ve secured financing with Stock Yards Bank (Term sheet in hand, 6.75% fixed).
I am bringing in a Key Principal (KP) to sign on the loan to satisfy the balance sheet requirements, but I want to make sure I offer a fair split.
The Question: For a standard KP who is only signing on the debt (no operational work), what kind of GP equity or fee are you seeing in this market? Is 10-20% standard, or is that too high/low?*
Thanks for the help.
Hey @Patrick Lismon! Do you have a "term sheet" or a "commitment letter"? As a former lender, there's a huge difference between them.
What minimum return is your LP looking to receive? (I've never heard of the term, KP). If it's MF, I suspect it'll be in the high teens. Have you run a proforma showing them the IRR?