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Updated about 5 years ago on . Most recent reply
Investor Question - Asked how they are protected in a deal
I have a very serious LP/Passive investor ask me today how they will be protected in a new deal. How have you responded to this type of question in the past? He's looking for mid-teen returns open to either value-add or ground-up development deals.
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#2 Land & New Construction Contributor
- Developer
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Originally posted by @William A Rojas:
I have a very serious LP/Passive investor ask me today how they will be protected in a new deal. How have you responded to this type of question in the past? He's looking for mid-teen returns open to either value-add or ground-up development deals.
If they are asking about risk you need to be honest and disclose there are no guarantees and the worst case scenario which is they could lose their investment as well as additional capital if the deal gets in trouble and needs a capital injection.
If they are referring to liability that's on the GP not LP ad they are not on any loan docs or Managment agreements etc. You also will have a liability policy in addition to other property insurance etc.