All Forum Posts by: Robert Shaw

@Mac Usher  if the deal can be financed, the sponsor usually arranges it and its part of the capital stack. Splits depends on the deal - how much is involved, what the returns are, etc. With mom and pop small check investors you can give less split, HNW and institutions they get the bulk.

If you're a small check investor, take a look at RealCrowd, CrowdStreet.

Lots of people say they will invest in deals. When it comes time to opening up the checkbook, all of a sudden they don't return calls.... I read in another post "he who has the gold...." well you know the rest!

I wouldn't go near it. If you're not putting your money in, you should be entitled a promote percentage which is 10-20% tops since you don't have a track record, and you're in a small market.

If you're putting financing together and sign the loan then you have skin in the game and can ask for a promote percentage. The investor who puts the down pay will be a syndicate investor and will get 80-90% of the profit, and you get 10-20% depending on how good the deal is.

If you don't get the financing then you're a broker/middle man, and can get a referral fee.

You have to sweeten the deal. I would not personally invest in a deal with that kind of split. Try hard money.

@gopinath 

@Gopinath Chandra A few red flags: 1) multiple emails to the company had no response. 2) bank finance terms were very bad. high interest means banks consider this high risk 3) sponsor had no deals in the past 2 years 4) solar panel bond may be an issue when they resale. 

Their presentation was good, with a simple value-add stabilization story. Just not convinced they will be able to execute. 

Does it have any national tenants in it? What's the cap rate? Vacancy rate? 

@Don Konipol is absolutely right. This is typical of small developers who haven't raised outside money before. Sam will lose this deal because investors don't have to invest in his precious project. 

Just Google syndication waterfall and you'll have a better understanding of how deals work.

Yes. Even though you returned the principle to investors, you didn't buy them out. They still own a percentage of your LLC. Everything has to be spelled out clearly in the operating agreement of the LLC and Private Placement Memorandum.