Question 1

What is a preferred return?

Accepted Answer

A yearly percentage investors are paid on the money they put in before the sponsor shares in the profit. It is not a promise. If the deal does not make enough, it is not paid in full. Here it is simple, not compounded: the percentage times the money times the years.

Question 2

Why do investors get their money back first?

Accepted Answer

Because that is how most deals are written: sale money goes to investors’ capital first, then the preferred return, and only then is what is left shared. Your operating agreement sets the exact order, so read it.

Question 3

What is “the split”?

Accepted Answer

What is left after investors have their capital and preferred return is shared by a percentage. A common one is 70% to investors and 30% to the sponsor, or 80% and 20%. Your deal’s terms may differ.

Question 4

Why does cash paid during the deal matter?

Accepted Answer

Cash paid to investors while the deal runs usually counts toward their preferred return. So the more that was paid along the way, the less preferred return is still owed at the sale.

Question 5

What does “money from the sale” mean?

Accepted Answer

The cash that reaches the equity: the sale price, less the loan payoff and the costs of selling (broker, legal, closing). It is not the sale price.

Question 6

Is this a forecast?

Accepted Answer

No. It does the math on the numbers you type and nothing else. It does not say what any deal will earn, and it leaves out fees, taxes and other terms in your agreement.

Question 7

How does DoorRaise use this?

Accepted Answer

DoorRaise builds the operating agreement and the investor reports from the terms you set for your deal, so investors can see this same order, step by step.

¿Quién recibe qué cuando se vende el proyecto?

Los términos del proyecto

Preguntas

Define tus términos una vez