Multifamily Development Compensation/Deal Equity Structure
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[{"id": "izbe6qa", "text": "If you're acting as the actual buyer and there's no realtor involved, anywhere from 1 - 3%. If there's a realtor involved they get anywhere from 1 to 6% and you can either get something from that realtor for using their services \"exclusively\" or a % on top of that. Or a piece of the development fee which is usually around 4-5%. I have seen muni development fees as high as 8% but that's not the norm IMHO.\n\nDidn't your company offer you x %? You do say you get equity stakes.\n\nOr did they leave it to you to fend for yourself?????\n\nI just broker the actual commercial real estate loans - acquisition, bridge, refi, rehab, construction etc... so am not sure if I'm answering what I think you're asking, working as the acquisition person at your firm.", "replies": [{"id": "izerm4m", "text": "I get salary and bonus as is but all of the other equity stakes so far have been on a deal by deal basis and as a gesture of good faith to keep me around but this will be formalizing what I'm owed in each deal. \n\nThis comment is helpful though because now I can do some cost benefit analysis. Our dev fee is typically 15k per unit so I can compare that versus what our typical equity upon completion of these projects", "replies": [], "depth": 2}], "depth": 1}, {"id": "izbimno", "text": "NJ commercial lender here, it sounds like you have a pretty nice deal going for you. 2-5% is pretty standard assuming your not putting in any capital. It's actually probably on the higher end. I'd try to lock in the higher end of that range. I assume you have some sort of cash compensation as well? Salary? Bonus?", "replies": [{"id": "izer167", "text": "Yes salary and bonus as well, this is in the interest of establishing a long term relationship they've said.\n\nThank you though, that is helpful. It sounds like I've got a pretty great set up as is haha but I'll push for that 5%", "replies": [{"id": "izeri5e", "text": "Nice, I manage a team of commercial lender across NJ so if you want to connect feel free to reach out?", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "izbimz4", "text": "Your just doing to acquisitions end, but no construction management or finished product sales/rental?\n\nI would expect it to be something that is effectively a broker fee that gets rolled into the deal. Some lump sum per deal with small piece of equity. \n\nI'm just guessing and am interested because I'm  looking to do something similar. Also in NJ.", "replies": [{"id": "izerweb", "text": "That is correct. In the case of just taking the value of what would be paid to a broker and rolled into the deal it seems like I've got a very generous set up as is", "replies": [{"id": "izeuyr9", "text": "I am a believer that finding the deal is perhaps the most important part of this business. So if you are good at that, it's valuable.\n\nAlso, let's look at it this way. Suppose it's a $1mm deal. A broker fee of 5% is $50k. If that deal was structured typically with 25% down payment, that's $250k of cash down. In theory if you rolled the commission into the deal, it would be 20% of the deal.  It's different with new construction and different loan and equity requirements. \n\nOverall though, a salary and a piece of the deals seems pretty good.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}]