How much Equity Should I Offer My Partner?
Hello everyone,
I've been investing for 10 years with multifamily, but never built from the ground up. I'm about to get in my first 4 unit apartment development project and have zero experience. I have the capital and assets to get a loan for the land + construction cost, but again, zero experience.
My potential partner has developed numerous properties because he works for a national home building. He understands how to get through the county, present and get projects approved. He knows the cost, timeline and can take it to the finish line. He does not have cash to contribute to the loan and is not financially capable of guaranteeing the loan.
The plan is for us to acquire the land, build the property, lease it and when the construction loan turns to a permanent loan, hold and move onto the next project. After we build, the holding period is where my operational experience will come into play.
How much equity and/or consult fee should I pay him? I plan to do multiple deals with him so the deal we cut now will lead into the future. It might be worth mentioning that he is the the one who found the the land we're about to buy.
Thank you!