When a real estate project is developed there is a definitive amount of money that is required. The developer must find the funds to buy the land or building, to do the construction or renovation, and to cover overhead expenses and holding costs.
To finance all of that, the developer combines debt from banks, and equity from investors. This is called the capital stack and you can see how it works on all of the real estate offerings listed on Small Change. In most projects the developer (sometimes called the sponsor) will also contribute capital, or equity, to the capital stack.
Find out about the importance of the developer’s capital contribution, his or her ‘skin in the game’, in this video produced by Adam Gower of the Gower Crowd.
Watch it now.