A financing model for custom home builders uses a $1 million interest-only loan at 12% annual rate. The lender keeps 4% as a processing fee after paying investors 8%, plus collects a 2% origination fee at closing. The deal uses a GP/LP partnership structure to allocate profits.
We set up an interest-only payment with a, say, a home builder. We're doing this right now with a custom home builder. They're taking a million-dollar loan with us. We're providing them that million-dollar loan at 12%, but we're paying our investors a guaranteed contractual 8%, right? And we're holding that 4% as that processing fee. Now the builder also paid us 2% on the loan as part of the closing costs. So we took a 2% origination fee so that way our investors didn't take that hit. We had it come from the actual builder. So an equity syndication, it's set up in a way where we can do like a waterfall or instead of the— it'd be more like a GP/LP situation where we GP with the builder.
