What is the best way to incorporate someone who could raise funds for you into a real estate deal
If I’m syndicating CRE projects and someone is able to garner capital for me that isn’t their own, what is the best way to fit them in a deal? LP position, silent LLC member, exit fee, equity position?
[{"id": "iigm80y", "text": "This is a question best directed to a securities lawyer.", "replies": [{"id": "iigo5fg", "text": "Literally the only answer.", "replies": [], "depth": 2}], "depth": 1}, {"id": "iigwc2x", "text": "Broker/referral fee. Why give them upside unless they demand it?", "replies": [], "depth": 1}, {"id": "iihle2d", "text": "by you being in the initial phase of seeking answers to your questions, nothing is off the table at some point, you'll want to buy them out at some point so position your \"bps\" at a reasonable and attractive price which will allow you flexibility to buy your equity back at a later date.  Silent partner?", "replies": [], "depth": 1}, {"id": "iihpm0i", "text": "If i bring capital i general take 2% fee as do many others i know\nIf i like the deal personally id offer more of my services and take a gp spot\nWith it being harder to raise money im seeing alot of syndicators offering gp spots for money raisers", "replies": [], "depth": 1}, {"id": "iii1fq3", "text": "Industry standard:\n1% for Debt Financing, \n2% for Subordinate Financing (mezz loan, preferred equity), and \n3% for Common Equity (JV or LP)", "replies": [{"id": "iiitx9x", "text": "This is the answer.", "replies": [], "depth": 2}], "depth": 1}, {"id": "iii2c25", "text": "The \u201cbest\u201d way is in a legally compliant and scalable manner. Tell them to get a BD license and pay them a fee. \n\nNo points unless you absolutely need the funds.", "replies": [], "depth": 1}, {"id": "iiiag0j", "text": "Finder's fee for the capital they bring in. Agree to the percentage and tell them they can clip the same fee from any other dollars they bring in. If they want to roll their fee into the deal, you can allow them to do that as well if they want to participate. I'm always leary of giving someone a piece of the deal for things they \"might\" do.", "replies": [], "depth": 1}, {"id": "iiib0dx", "text": "If they\u2019re purely raising the capital then going hands off, then it should just be a placement fee. 1-2% is standard.", "replies": [], "depth": 1}, {"id": "iiibnpj", "text": "Honestly it will depend on what they ask for. Most brokers take an equity raise fee of 2-3%. If you really value it and their value goes beyond cobbling money together for one deal maybe consider giving them a share of the GP so they get promote etc.", "replies": [], "depth": 1}, {"id": "iiiy68c", "text": "I feel like most people are referring to a finders fee but I think that only works if your capital raiser has a brokerage license, unless I\u2019m mistaken? I think you can get around that in a Co-GP setup, but you\u2019d have to ask a lawyer", "replies": [], "depth": 1}, {"id": "iin6ulf", "text": "Per SEC rules; someone cannot just raise money for a deal. They need to materially participate. In other words, they need to do more than just raise money. They need to have additional roles. Speak to a SEC attorney that specializes in setting up syndications.", "replies": [], "depth": 1}]