Why We Put Skin in the Game - Multifamily Real Estate Investing and Development
With Percy Nikora, Co-Founder
There are some lender requirements where we have to meet not just the net worth requirement for that loan, but also a liquidity requirement. They require us to keep a certain amount of money liquid based on the loan. You have to factor all of that in.
The first and foremost rule is - before we present a deal to any of our investors - is this something we would invest in ourselves? We have to get excited about it. We want to have to invest in this deal. Having said that, I naturally want to put in as much as I can into that deal, but also looking over whatever ... Because each deal has a three- to five-year horizon, I know that once I put the money in, you're locking it up for three to five years, and I have to keep money aside for other deals, as well. So, we try to strike that balance.
Every deal that we've presented to our investors, we've invested in ourselves. Not just our ... This may be worth mentioning ... So, we get, as a sponsor in this type ... In this syndication model, as a sponsor, you get a piece of the deal. I'm not talking about that, or any acquisition fee; anything of that nature. This is cash that we put in alongside the investor; we actually invest at the same unit class that the investors get, so we get the same benefits that the investor gets and we're treating it at this ... It's a level playing field. When we put our money in, when we put our cash in, it's at the same level as the investor. We're no different than any one of our investors in that deal.
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