Hi everyone, I’ve been looking for parks and am planning to syndicate. My balance sheet does not support guaranteeing a loan so I’m stuck asking my investors or people I know to guaranty the loan on my behalf. Has anyone done this in the past and what kind of fee do you pay the guarantor? 1% of the loan balance?
Thanks
There are a lot of deals out there looking for funding. I don’t know why anyone who has the bucks would be attracted to what you are describing.
The attraction is that the majority of failed real estate deals don’t see the guarantor being sued by the lender for the balance of the loan unless there was fraud. Typically the lender will just take the project back, sell it to the servicer, etc. So in essence you’re getting paid 1% of the balance for the risk that something happens, but that something is unlikely both because the deal has to fail and that the lender would need to choose to go after the guarantor instead of just taking the project back. I’m leaving out the fact that they can do both, I know.
Also, asking someone to guaranty a loan doesn’t require a cash investment. So you can do both, you can invest in the deals you’re describing and guarantee.
I don’t know anyone who in their right mind would guarantee a loan for a 1% fee. That is a horrible trade.
Most structures I have seen involve a significant equity piece as well (with no cash invested).
I would be interested for equity, but not the 1%. Please shoot me an email if interested.
If your syndicate is strong and willing to be a warm body guarantor on a non-recourse loan we may be able to help. In other words they would have to sign on the loan, but minus bad boy carve outs they would not have a contingent liability associated with the debt. Let me know if I can help.
Aubrey
Typically 50% in some cases if you are strong and putting a large down payment (low risk) your looking at 25%.