Real Estate: Structuring

A majority of real estate deals use a combination of personal capital and outside investor equity to fund deals. The members of a real estate team usually represent how the deal has been funded and the structure of its financial terms.
A real estate joint venture (JV) is an agreement between multiple parties to work together and combine resources to develop a real estate project. This approach enhances a project’s leadership by unifying real estate operators that possess extensive experience with real estate capital providers that supply the funding.
A real estate partnership is typically composed of a general partner (GP), who acts as the sponsor and takes on all of the development and management responsibility, and limited partner(s) (LP), who are the capital providers.
A Sponsor is an individual or company in charge of finding, acquiring, developing, and managing a real estate property on behalf of the partnership. They manage the project from conception through completion and are responsible for all aspects of the transaction and on-going operations. Sponsors also generally invest 5-20% of the total required equity capital.
An LP is an individual or group desiring to invest in real estate but may not have the expertise to do so or want to do so passively. An LP therefore joins a real estate deal as the capital provider and can deliver up to 90% of the required equity in a project.
The exact terms of real estate offerings on NextSeed will vary with each campaign, so it is important to review the campaign documents. All the information is located on or accessible from the applicable offering page.