How is a broker paid on a joint venture development deal?
Let's say I'm putting together a land deal.  The owner of the land has a super low basis and wants to set the land into a JV at well below market value.  The land owner will be the LP on the deal and cut the equity check.  I represent what was to be the buyer (or GP) before there was talk of the JV.  So in this instance how would I get paid my fee?  Would we just determine what market price is for the land as if we were taking it to market and establish a commission based on that number?  Curious to hear what you pros would do.
[{"id": "i88oowy", "text": "I\u2019d come up with a flat fee you think is fair for your work. Typically we represent GP and raise LP capital and charge a percentage of capital raised. Since this is a bit of the reverse, it\u2019s trickier. Hard to say without knowing more about the deal.", "replies": [], "depth": 1}, {"id": "i88zo09", "text": "Market price based on value of land and standard commission. Depending on hold vs sell also locking in sale commission or ownership percentage instead", "replies": [], "depth": 1}, {"id": "i89dxrs", "text": "why isnt the land owner a cogp? i would think they want part of the promote. also off the top of my head and not being either  tax lawyer or cpa, youre going to have issues if youre doing things at well below market value.", "replies": [{"id": "i89niiq", "text": "Well wouldn\u2019t that be the case for any LP then? And you can\u2019t have both sides. They aren\u2019t after the promote, they are after the preferred return. Maybe I\u2019m not thinking about it correctly\u2026?\n\nAnd in this case the LP is not a developer. He is just a landowner and has mucho dinero.", "replies": [{"id": "i8bp8jt", "text": "if im the land owner im bringing something unique into the deal - the land which entitles me to a cogp and a bigger slice of the pie. also, the pref is the hurdle that the sponsor has to beat to earn their promote, which is their disproportionate return based on equity (which is where the money is made in these deals)", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "i89i82f", "text": "Not sure how institutional this deal is and what your relationship to the sponsor is, but another option would be to roll your fee into a piece of the deal.", "replies": [], "depth": 1}, {"id": "i8a9vg1", "text": "Since you mention the land owner has \u201cmucho dinero\u201d you would be wise to advise him to hire a real estate attorney to structure the deal and create the entities.\n\nIn my REPE I would structure this as a JV. The land owner contributes the land to the operating entity in exchange for an appropriate number of limited partner units. \n\nThe structure wound pay a preferred return, and equity % value of finished product. Pretty straightforward. There are other ways to structure but this is the easiest, lest he wants rents in which case a lease with exit option could be structured.\n\nAs for you as the broker you should be paid at the full value of the land\u2019s market value. Then, you should also be included in the marketing of the project whether it\u2019s a for sale exit or a term hold of the completed project. \n\nThe deal started with you and should end with you.\n\nAs mentioned already, if you\u2019re in a position, and perhaps even if you\u2019re not, given you\u2019re comfortable with the developments economics, you should try and get your fee into the GP side of the deal. That way your % also gets some of the promote too. \n\nIf you want/need some dough at close then consider suggesting the fee get distributed as 100% with 90% going into the GP and 10% paid to you. I would\u2019ve advise asking for much more cause have minority GP interests is a pain. You\u2019ll need to actively participate in the project which can also be advance marketing of the project, etc\nAll the best", "replies": [], "depth": 1}]