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?
What is a waterfall and why does it matter?
Should I charge the builder interest on my land contribution?
Can I choose which unit I keep?
Related Reading
Official Sources Referenced
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