Key Principal for mf property deal

[Subbu Munagala]

Happy New Year!

I am from NC and new to the MF investment. I learnt that a key principal, with mf experience, is required to qualify for financing. My internet search returned very little about KP role and compensations. I am not surprised given the nature of the information. Hence reaching out to you, if you could share from your experiences.

[Charles Seaman]

@Subbu Munagala KP roles and compensation can vary widely.  I've heard of KP's charging anywhere from 10% to 50% of the GP.  Similar to compensation, roles will also vary widely.  Some KP's will want to be very involved throughout the deal being that they're signing on the loan, while others are happy to simply sign on the loan and not be involved if they feel confident in your ability to successfully run the deal.

I haven't been a KP yet, but I've dealt with different KP's and have used some in the deals that I've done.  Overall, my experience with the KP's that I've dealt with has been very good.  Being that they're an essential part of the business, my recommendation is to build good relationships with them and expect that you'll need to give away part of the GP to them until you're in a position to be a KP yourself.