Deal Structures | Capital
Capital Partner Joint Ventures
If you have cash and want exposure to BC multiplex development without becoming a builder, you're a capital partner. This page covers the roles capital can play, the protections you should insist on, and the sentences in a JV agreement that determine whether you get paid.
The Four Capital Roles
Limited Partner (LP)
Passive money. Contributes capital, has no day-to-day decision rights, and is shielded from liability beyond the contribution. Standard for CMHC-financed deals with multiple investors.
Active Co-Sponsor
Money plus involvement. Sits on a small management committee, has veto rights on major decisions, and may sign a personal guarantee on the construction loan in exchange for a higher promote share.
Mezzanine / Preferred Equity
Capital that sits above common equity but behind the senior loan. Earns a higher coupon (12–18%) and is repaid before any common equity sees a dollar. Used to plug a gap when senior debt won't go to 95% LTC.
Friends & Family Pool
Several individual investors aggregated under one LP. Lower per-cheque size, more administration, more disclosure obligations under BC securities exemptions.
How Capital Calls Actually Work
Capital is rarely contributed all at once. In a typical Vancouver multiplex JV with $800k of capital partner equity, the call schedule might look like:
- Closing call (30%, ~$240k) — funds soft costs, design, permits, and pays out the existing mortgage on the contributed lot.
- Permit call (25%, ~$200k) — funds the construction loan deposit, builder's risk insurance, and bonding.
- Construction draws (35%, ~$280k) — capital partner funds the gap between the lender draw and actual costs at framing, lock-up, and finishing.
- Lease-up reserve (10%, ~$80k) — covers carrying costs from substantial completion through stabilization.
Default remedies for missed calls are critical — see JV Agreements.
Protections Capital Should Always Negotiate
- ✓Preferred return paid before any sponsor or builder profit
- ✓Major-decision veto on sale, refinance, scope change, additional capital
- ✓Independent project monitor or quantity surveyor
- ✓Cap on related-party fees (GC, property management, leasing)
- ✓Quarterly reporting with construction draw schedule and variance to budget
- ✓Buy-out right if the sponsor is removed for cause
Best For
- ✓ Investors with $250k–$2M to deploy and a 24-month time horizon
- ✓ Family offices building a position in BC multiplex
- ✓ Industry insiders backing a builder they already trust
Usually Fails When
- ✕ You expect a JV to be liquid
- ✕ You skip BC securities exemption documentation
- ✕ You take the sponsor at their word on related-party fees
What To Verify Before Spending Money
- → The sponsor has a completed comparable project
- → The waterfall puts capital ahead of sponsor profit
- → You can walk if reporting is missed
Official Sources Referenced
Explore Your Lot's Joint Venture Potential
Enter any BC address to see what a multiplex JV could look like on this parcel — unit count, rough build cost, and what the land contribution might be worth.