I regularly hear of people starting out by sourcing a deal then "partnering" with an equity investor/developer for a piece of the equity without investing any cash. Clearly there is no control, but perhaps some operational assistance i.e. sweat equity. Anyone have any experience in this and know what is a normal amount of participation in this case?
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No one ever experienced this?
I think you're asking about Syndicating although I'm not totally sure. There are a lot of different ways to syndicate a deal, a popular way can be to act as the broker and to roll your commissions into the purchase price. I know of a guy who puts up zero equity, but sources the deal and puts a couple investors together. He then rolls his fee into the purchase price and also acts as the asset manager, taking a % fee off the NOI.
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Kind of syndicating, except with one partner which is pretty much taking the lead on the project. I view syndicating as how you defined it. To be more specific I was looking at what people usually get in regard to equity participation if not putting anything up e.g. an acquisition fee plus 20% on the back
I think it all depends. I'm by no means an expert but I've also seen deals where there are a few partners, one will be the developer, the other two and the developer will split their contributions evenly. The developer will put the project up, the other two will handle everything after that, they split the profits evenly.
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