Funding for Capital Needs Assessment

[Jesse Fox]

Hi there,

I’m curious as to how a capital needs assessment or any other due diligence study is paid for if the sponsor’s goal is to have none of their own equity in the deal? In other words, if you’re bringing a deal to an equity investor, you’ll need to have a financial projection of the property and the equity required for the acquisition and hold period. Within that projection is the capital expenditures that may be needed at property for various capital improvements, but it seems like a capital needs assessment would be needed for that type of forecast. How is this study paid for if the investor wants a complete underwriting of the property and the sponsor doesn’t want to put in any of their own money?

Thanks,

Jesse