This is partially artificial because the federal reserve had lowered prime significantly (the rate they lend money to banks) to help stimulate the economy.

Usually investors (the LPs) are NOT sophisticated so that shouldnt be a concern.................lol.It can be argued the more GOBBLEDYGOOK in the offering statement the more Genius like the LEAD can be shown to be..........lol.You can always spot the newbie syndiactor........always worried about the ACTUAL property.   

the last few post are talking about seller subordination.. in a flat market that can work in a stimulated or growing market your going to have a hard time getting a seller to do that.one there are tax implications that need to be thought out by the seller.How we do it is pretty straight forward.last deal went like this.Raw dirt 500k plus 100k to get it to prelim plat  we pay cash for all of that no debt no loan.1 million to improve it to shovel ready... we borrow that in first position.. 23 improved lots appraised for 2,990,000  bank loan 1 mil or  33% of ra dirt.. you can squeeze sometimes and get a bank to go 50%  they did give us the 100k on the first draw for our soft costsnow we get vertical loans of 240 k or so to build the homes  plus 60k for the lots or about 300k.. so new loan for 300k.this loan retires the banks horizontal loan.. and we own the last 5 lots free and clear since we are paying an accelerated  pay down.. houses selling for 450k   so right at a 70% ARV loan on new construction which is about where they like to be.now our loans are a tad higher because we put in 10k fluff and 10k interest reserves.. so as we build out we do not have any monthly payments.. so in theory we got interest reserve on the horizontal loan and we have interest reserve backed into the vertical.. so we did this all with ONLY 600k in cash.. profit a little over 2 million end of the day in about 26 months total.. 

2.If it’s not realistic, I’m considering taking my capital and investors and bringing them into someone else’s deal as LPs to learn the ropes and gain some experience and credibility.

I guess it might be possible, but one would hope our President is quite familiar with this REI stimulant and the benefits of it for economic growth of our country.Cheers, Buddy

The first 8% annually is returned to LPs then the remaining cash flow is split 70/30.

Then the feds dropped it low to stimulate the economy.

@Zachary Bellinghausen  One issue that’s going to come back to bite a lot of sponsors (and their LPs) at this point in the cycle is their misunderstanding of exit cap rates. 

Would hate for one of your 30/70 deals to go south in the future, one of your LPs get upset because he lost money or didn’t “get what was promised” and decide to pursue a suit against you and/or your company.

Especially if I'm right in assuming that would help stimulate the market's rebound... return confidence to those who can buy but aren't for fear we aren't at the bottom, that they couldn't resell if they had to in 3 or 5 years... allow those who want to move but can't to be able to, to go where jobs are, to go from "under employed" to fully employed... to convince investors who still aren't sure about real estate to chase the market and poor more money into it...