How much do you expect a Co-GP to coinvest if limited funds?
I have great experience in a specific market and looking to put together a couple deals. I have some potential co-gp investors who are interested in the deals, but I have limited funds.
Is sweat equity a real thing? What would you expect a co-gp running the deal to have liquidity wise, and if a sweat equity sort of thing, what would be a fair deal structure with them? I would love to make a small fee for putting together these as some are off market, but I also understand that they don't want me to "fee out" of a deal day one.
Most of these deals are existing assets, except for two that are new construction.
Appreciate any thoughts!
Sweat equity is real! What you’ll want from a co-gp is basically their name/reputation and some liquidity. Most important is their rep. As a co gp I’d imagine it goes like this:
1. You do everything, with some mentorship from co-gp.
2. You make some sweat equity in exchange for doing all the work. They make a great deal of the GP return for putting their name and rep on the line for you.
Thanks! So what would you expect a waterfall and splits to look like in this situation
Sure thing. It will vary significantly, but id imagine there is a singular GP vehicle, and you and the co-gp have an agreement as to ownership. I.E. you’re 10-20% of the GP, they front all the capital and they’re diluted.
I think this can be heavily varied from place to place. It’s probably most important to understand what each potential investor needs, and their contribution and approach it from a nuanced perspective- this includes understanding the value you’re contributing and bringing to the table as well!
how do up and coming GPs do some many deals (I know a few groups) with each deal requiring a good amount of equity as a GP? any creative structure for them to not run out of money?
A wealthy co-GP and creative arrangements with equity and/or contractors
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