Bottom Line Up Front (BLUF)
How multifamily investors use gap funding to cover earnest money deposits, due diligence costs, and the final equity raise gap.
Gap Funding in Multifamily Real Estate
In multifamily investing, the "gap" is often much larger than in single-family deals. Whether you are a syndicator needing to fund "hard money" earnest deposits or an investor looking to cover your portion of a capital call, gap funding is a vital tool.
Key Uses for Multifamily Gap Funding
- Earnest Money Deposits (EMD): Large multifamily deals require substantial EMDs that can be tied up for months.
- Due Diligence Costs: Legal fees, environmental reports, and inspections can cost $50k+ before you even close.
- The Equity Gap: If your syndication raise comes up $100k short, gap funding can close the deal on time while you finish the raise.
Modern Multifamily Funding
By using unsecured term loans or corporate credit stacking, multifamily sponsors can keep their own capital liquid to pursue more deals while maintaining control over their projects.
Filed Under
Multifamily
Syndication
Gap Funding
