Deal & Partner | Structures

Deal Structures & Splits (With Real Math)

Every co-development deal reduces to four archetypes. Pick the wrong one for your lot and you leave six figures on the table. Here is what each structure looks like on a $1.8M Vancouver lot with a 4-unit build.

The Four Archetypes

Land-for-Units Swap

Homeowner contributes land at agreed value. Builder funds the build. Units are split in proportion to contribution.

Homeowner Gets

1 to 2 finished strata units, title free and clear after completion

Builder Gets

2 to 3 units to sell or hold to recover build cost and margin

Best For

Downsizers who want a smaller footprint and zero construction capital exposure

Watch Out

Land value is agreed today but units settle in 18 to 24 months. Market risk sits on both sides.

Cash + Unit Hybrid

Homeowner takes part cash at construction start and keeps fewer finished units. Builder fronts more cost, takes more upside.

Homeowner Gets

Cash draw (e.g. $400K to $800K) plus 1 retained unit

Builder Gets

Most of the finished building to sell, refinance, or hold

Best For

Homeowners who need liquidity now but still want a Vancouver foothold

Watch Out

The cash portion is usually paid against a construction lender draw. Ranking behind the lender matters.

Equity JV with Waterfall

Both parties contribute to a single-purpose company. Profits flow through a defined waterfall: return of capital, preferred return, then promote.

Homeowner Gets

Pro-rata share of net sale proceeds after costs, typically 35% to 55% depending on land value weighting

Builder Gets

Developer fee plus promote above a preferred return hurdle (often 8% to 12%)

Best For

Sophisticated owners comfortable with real estate accounting and a longer decision cycle

Watch Out

Waterfall math is where retail owners get outcooked. Get independent advice on the term sheet.

Sale-Leaseback

Homeowner sells the land outright now at a negotiated premium, then leases a completed unit back at below-market rent for a defined term.

Homeowner Gets

Full land sale proceeds today plus a guaranteed tenancy at a discount

Builder Gets

Clean title immediately, no partnership governance, full control of unit mix and sale timing

Best For

Older owners who want a clean exit but can't stomach moving twice

Watch Out

Rent discount is often capped at 5 to 10 years. After that you're a normal tenant at market rent.

Worked Example: $1.8M Lot, 4-Unit Build

Assume a standard 33 by 122 foot R1-1 lot on the east side. Four strata units at 1,200 sq ft each. Build cost $2.4M all-in. Completion in 22 months.

Land contribution (agreed): $1,800,000
Hard + soft construction cost (4 units): $2,400,000
Total project cost: $4,200,000
Finished unit ARV (per unit): $1,400,000
Gross project value (4 × ARV): $5,600,000
Gross profit before sale costs: $1,400,000
Sale costs @ 5% of GPV: $280,000
Net profit: $1,120,000

That $1,120,000 net profit is what gets split. Which structure you choose determines who gets how much of it.

Same Deal, Four Splits

Land-for-Units Swap

Homeowner

2 finished units (= $2.8M value, vs $1.8M land contributed)

Builder

2 finished units minus sale costs = ~$2.52M

Homeowner effectively earns $1M of "promote" by taking units in kind instead of cash.

Cash + Unit Hybrid

Homeowner

$600K cash + 1 unit ($1.4M) = $2.0M total

Builder

3 finished units minus $600K = ~$3.6M

Homeowner trades upside for liquidity. Usually the right call if you need bridge cash.

Equity JV (50/50 on land value weighting)

Homeowner

~$960K of net profit + return of $1.8M land = $2.76M

Builder

~$160K net profit after developer fee + return of $2.4M build = $2.56M

Waterfall: return of capital, 10% preferred return, then 50/50 split of residual.

Sale-Leaseback

Homeowner

$1,950,000 cash now + 5 years at $2,400/mo rent (market $3,800)

Builder

4 units to sell or hold, full control

$1,950K = $1.8M land + $150K premium for leaseback commitment. Clean and fast.

Best For

✓ Owners who can hold through an 18 to 24 month construction cycle.
✓ Lots where a 4-plex or better clearly pencils under current zoning.
✓ Partners who will put the math into a shared spreadsheet, not just a slide deck.

Usually Fails When

✕ The builder refuses to disclose per-unit hard cost assumptions.
✕ The waterfall language is "standard" but doesn't define the preferred return clearly.
✕ Your unit selection is "to be determined".

What To Verify Before Spending Money

→ Independent valuation on the land contribution, not just the builder's number.
→ The exact waterfall in plain English, with numbers worked at two sale-price scenarios.
→ That your retained unit(s) are specified by lot number and drawing.

FAQ

Which structure is most common for small Vancouver lots? +

Land-for-units. It is the simplest to understand, the simplest to explain to a lender, and it keeps the homeowner out of the construction risk stack. The cash + unit hybrid is second.

What is a waterfall and why does it matter? +

A waterfall is the order in which profits are paid out. Typically: (1) return of each party's invested capital, (2) a "preferred return" of 8-12% on that capital, (3) then a split of remaining profit. Where the splits happen — and at what hurdles — is where retail owners lose value.

Should I charge the builder interest on my land contribution? +

In a proper equity JV, yes. Your land is capital, same as the builder's cash. A preferred return of 8-10% annually on the land value is standard and non-negotiable in sophisticated deals.

Can I choose which unit I keep? +

Yes, and you must specify it in the definitive agreement — unit number, floor, orientation, square footage, finish level. "A unit" is not good enough. Builders who won't let you pre-select are hiding something.