Real estate capital raising and syndication
How do I raise equity for a ground-up development?
Short answer
Size the equity check first, then decide how much you raise yourself and how much a partner covers. On commercial development I'm guessing most sponsors put up five to ten percent. The rest comes from a co-GP, a strategic partner or family offices. On a first deal you may give up more of the economics. Many sponsors talk to a securities attorney about how to structure this.
Start with the size of the equity check
Ground-up development needs equity before there is a building to point at. On commercial real estate development, I'm guessing most sponsors put up five to ten percent themselves, sometimes a little more. The rest has to come from somewhere else. Lenders set their own requirements, so many sponsors confirm their numbers with the lender and an attorney.
Some sponsors raise most or all of the equity from outside investors. But if this is your first raise, you may give up more of the economics to make it work. You might give up a lot on your first, second or third deal. That is a normal price for a track record.
Shrink the raise with a bigger partner
Many people say they need to raise twenty million dollars. Then a bigger partner brings infrastructure access or covers half the funding, and the number drops to six or eight million. I gave that example on a renewable energy question, but the idea carries over to development. Ask who benefits from your project getting built and whether they would put capital or resources behind it.
Also look local. The people near you are already further up the trust curve, so you can move them along faster.
In this webinar Q&A I talk through raising all of the equity versus partnering, and what a first-time sponsor risks.
Summary and key takeaways from this video
"You can go to a sponsor who's knocking out deals like yours all day long, perhaps, and say, "Hey, I found a great deal. I think I can raise part of the capital."."
A co-GP can help you get the raise done. The bigger risk is never reaching the finish line on a first deal. I would rather own a smaller piece of a deal that closes than all of a deal that dies.
How developers in our community structure it
A developer on one of our joint venture webinars builds only ground-up right now. In their Nashville market, they said, that is the only real opportunity because it is undersupplied. The same webinar features Meg from CA South, who used joint venture and co-GP deals to reach ultra wealthy investors early.
This webinar covers ground-up development in an undersupplied market and how joint ventures and co-GP deals helped one member scale.
On a panel of investors who have each raised $20M or more, the operators were selective about development. Several markets are overbuilt. They told the room they work with large family offices and institutional partners on that side of the business.
Here a panel answers how much ground-up development they do and who partners with them on it.
Summary and key takeaways from this video
Where the equity usually comes from
Family offices are a natural fit for development equity, but you need to reach them the right way. I sit on the board of a real estate development firm with two hundred and fifty million dollars in assets. They had three investors and did not know what a family office was. After they joined the Family Office Club, they went straight to larger investors. The founder calls potential investors every week and attends a few relevant events each year.
Membership is $300 a month or $1,500 a year. Many sponsors talk to a securities attorney before they speak with investors about an offering.
From my book
Keep in mind how family offices actually allocate to real estate. The average family I work with puts about 20 percent of its real estate money into development and about 80 percent into cash flowing real estate. Most families also choose four to seven different real estate food groups and spread across seven to twelve funds, providers and sponsors. So development is a slice, not the whole plate. Pitch your ground-up deal as one piece that sits next to their cash flowing holdings, and expect them to size their check accordingly.
"Usually it's 20 to 35 percent, sometimes as much as 40% of their net worth is in real estate. The average family I work with puts about 20% into real estate development and 80% into cash flowing real estate."
"So to recap here, first part of the portfolio, public markets, second part real estate, typically 80% cash flowing, 20% development. And most families are choosing four to seven different real estate food groups, and anywhere between 7 to 12 different investment funds, providers, and sponsors to diversify their wealth."
From the source
- Richard guesses most commercial real estate development sponsors put up five to ten percent of the equity themselves.
- A Nashville developer said they build only ground-up because that market is undersupplied.
- Panelists on a real estate investor panel said they are selective on development and partner with large family offices and institutions on it.
Sources
From Richard C. Wilson's Centimillionaire Strategies YouTube channel: Ultra-Wealthy Investor Q&A Webinar, Joint Venture & Co-GP Webinar - How to Close Deals with Peers & Partners in the Family Office Club, Real Estate Investor Success Stories: Hear from 5 real estate investment firms who have raised $20M+. Quotes come from the video captions, lightly edited for readability. Figures are the speakers' own estimates and experience.
General education only. Not legal, tax or investment advice.
Talk to a securities attorney to explore options around co-GP fee splits, offering structure and investor communication rules. Do not use AI to write your own legal agreements.
What to do next
- Write down the total equity the project needs and how much you can put in yourself.
- List strategic partners who benefit if the project gets built.
- Decide if a co-GP or experienced sponsor lowers your risk of not finishing.
- Build a list of local investors and family offices and contact them every week.
- Many sponsors talk to a securities attorney about their offering structure before they pitch.
People also ask
How much equity do developers usually put in themselves?
On commercial real estate development, I'm guessing most put up five to ten percent, sometimes a little more. Your lender and investors may ask for different amounts.
Should a first-time developer bring in a co-GP?
Often it makes sense. A co-GP can help get the raise done, and the larger risk on a first deal is never reaching the finish line. You give up some economics in exchange.
Can family offices invest in ground-up development?
Yes. Panelists in our community said they work with large family offices and institutional partners on development. Each family office has its own mandate, so confirm fit first.
Related questions
- How do I create a real estate investor presentation?Build it around the investor, keep it short, and make it look clean.
- What do LPs want to see in a sponsor's track record?LPs want a sponsor they can count on.
- How do I structure a real estate syndication for investors?Start with a clear split between sponsor and investors.
- What is a capital stack in commercial real estate?A capital stack is the full set of money that pays for a commercial property, ranked by who gets repaid first.
Work through it with the one-liner builder. See all real estate capital raising and syndication resources.