Credit partner compensation

[Austin S.]

I'm looking into doing a deal where there are the dealmakers (a realtor and his partner's LLC), a money partner (will provide the 20% down payment), and a credit partner (personally guarantee the 80% loan for the LLC). I'm searching as to what kind of compensation I, as the credit partner, should ask for? The initial offer was a flat fee of $3,000 and then an extra $500 per year the loan is outstanding after year 2, with maximum of 24 months. So, the total amount I could make is $4,000 if the deal lasted 4 years or longer. Now, the goal is to get the deal closed and then sell within the first 30 days. Short-term it looks like a good deal, long term not so enticing. I would like to maybe negotiate a percentage of the whole deal so if it ends up taking 2+ years, I would be benefit from price appreciation (of course if there is any). Thoughts from anybody on if the flat fee sounds reasonable? What other information might be needed to assess it?

[Ned Carey]

Originally posted by Austin Samber:

I'm searching as to what kind of compensation I, as the credit partner, should ask for?

As much as you can negotiate.

Why are you only getting the extra $500 per year for only 4 years. You are on the hook for the life of the loan. I would want some security in the event of default. That could be structured as ownership interest in the event of mortgage default or a confessed judgement or both.

Good luck - Ned