Lookin to earn equity in development as CoGP w/ no money in deal

[David Ervolina]

Hi All,

I've been working along side a Single Family Home developer looking to help identify opportunities to build his homes (at scale) within a 2 hour drive a major MSA where people have been fleeing from due to the pandemic.  We are targeting approved subdivisions of 10+ homes so we can hopefully start building homes quickly and capitalize on the "Urban Exodus" buyers that still want to be close to this city.  My goal was to provide sweat equity in exchange for an undetermined cut in the deal(s).  

The builder is currently raising LP capital at 90% to his 10% GP equity in which he already has a Co-GP partner.  The GPs have no experience building in these markets and I have been doing all the outreach to the brokers, land owners, other developers etc. to find deals for us to pursue. The GPs also do not have much experience with entitlement and infrastructure in these areas so we are seeking possible partners to help which I have been helping identify. Lastly, the style of homes we are prosing to build are a very modern contemporary design when almost all of the product that is selling in these red-hot areas are more of a Cabin/farmhouse-type of aesthetic.  There will certainly be demand for our product, but its very unproven so definitely some risk.

For the deal:  We have multiple deals in the hopper that I sourced and we would not have had them if it were not for me. I want to propose an equity stake for myself without putting in any of my own cash.  What do you think would be fair to me?  A portion of the GP equity? Any hurdle rates? Should I just asked to be paid as an employee or possibly a management deal of some sort?  

My role will certainly evolve over time as the deals progress, but below are some of the things that I have currently done.

• - Source off/on-market investment opportunities

- Manage all relationships with brokers, sellers, owners, and developers in each market.  Single Point of Contact
- Schedule tours and walk-throughs of all sites
- Identify potential partnerships with local developers that have a proven track record in infrastructure work
-  Network with other builders and developers to maintain market awareness
-  Assist with negotiating terms and specifics of purchase and sale agreements.
-  Developed an in-depth knowledge of the competitive marketplace, including product, site, local community, sales, advertising and demographics
-  Create marketing strategy to help pre-sell units ahead of development schedule

Important to note:  If these deals are successful, we plan to role out this concept in many different markets all over the country and be building hundreds of homes at once.  So I am hoping to come up with a deal structure that I can repeat again moving forward.

Thank you for your advice!