Need help: How would you structure this deal?

[Richard Z.]

Hi BPers,

Haven’t been here for a while, so glad to see there are so much things going on here. I'm a flipper also done some new development work. Need some help for this deal structure?

It’s an infill land development deal in bay area. Good neighborhood.

I had it secured 12 months ago, it can be subdivided into 3 lots(takes about 1 year). The local single family house market has appreciated 10-15% over last 12 months.

The numbers are like this:

-Land: 2.65M

-Soft cost: 300k

-Public work and utilities: 210k

-Hard construction cost: 2.86M

Total before construction: 3.16M

-Construction loan: 2.86M

-Loan interest: 229k

Sell at 8.8M

-Selling cost (commission): 396k

-Gross profit: 8.8 – 3.16 - 2.86 - .229 - .396 = 2.15M

ROI 2.15/3.16 = 68%

Total project length is about 2 years. 12/12 for entitlement/construction

My role:

• I secured the land one year ago, put in 220k deposit and 30k for some prelim work and due diligence.
• I will raise all the money,
• I will manage from start to finish, I also have a GC license but will only charge a minimal project management fee.

How would you suggest to structure the deal between me and my passive money partners? Also how to factor in the land appreciation in this deal? I believe the land is appreciated 15% minimum for the time I hold; there is rarely any land/lot on market.

Thanks a lot.