Help w/ structuring an equity partnership on 55+ housing project.

[Jeff Wolff]

I need some advice on structuring an equity partnership for a development that I'm planning to build. 

Here's the skinny on my project:  I have designed and engineered plans for a senior living community in the suburbs of Kansas City, Missouri.  All architectural plans are complete, infrastructure bids are in and ready for groundbreaking, and all civil engineering plans have been finalized--and approved--by all the city and county officials necessary to begin work.  It will be a successful project, as these types of facilities in our area--and I assume nationwide--generally have waiting lists for tenancy.  This is a 48-unit project. 

I am planning to GC and build this myself and keep it as a long-term investment in my real estate portfolio. I have rehabbed about 60 houses in my career, and I own and manage 41 SFR rental properties, so I'm not a newbie in the real estate world. I have never used partners for my deals in the past, but this is proving to be too big of a project for me to finance on my own.

The bank I'm using to finance the deal has kind of slow-rolled me on the loan and the loan officer oversold what he was capable of obtaining from the executive review committee. Essentially, the bank is capping me at an LTV that makes it necessary for me to do one of two things: Sell the shovel-ready development site to another builder, or 2) Bring on an equity partner to bridge the gap in my financing.

I am estimating the total project cost at just under $5MM.  I have $650,000 in liquid assets that I had intended to use to build out the first phase, with an additional $200,000 or so available to me for Phase 2 by peeling off a few rental properties and selling them.  But at this point let's just consider the $650K.  Fully built and stabilized, I estimate a monthly cash flow of $10,140 after accounting for all expenses, including the mortgage repayment on the bank loan.   I'm under the assumption that that is the amount that would be split amongst the equity partners by the basis of their stake.  

A couple of specific questions:  

1.  During the construction and buildout phase, would the equity partners expect any type of return considering the property would not yet be earning any rents?  

2.  How does principal paydown on the fully-amortized loan figure into the bottom line?  My company will be the sole borrowing entity and no other partner will need to sign a personal guarantee on the loan. 

3.  Let's say five years down the road I'm in a position where I can refinance the entire project into my name and I can pay off my investors.  What would they expect to receive on a $50,000 stake?  Is it based on appraised value, or is there a common amount--say 10%--that is agreed upon with the partnership agreement? 

Since I know I'll need equity partner(s) to raise the full down payment requirement, how would I structure the partnership to be fair to all parties? The people I've spoken with so far would be comfortable with an 8-10% ROI, with a buyout structure in place down the road. Based on my pro forma and estimates, this is a pretty accurate rate of return that I expect the property to deliver. However, I'm not sure of the logistics of how to structure this. Any advice from experts would surely be appreciated!