What Is A Capital Stack In Real Estate And 4 Different Layers?
What Is A Capital Stack In Real Estate And 4 Different Layers?
Abstract
Capital Stack is a representation of the amount of funds required to close a real estate transaction. It determines who and in what order will receive income and profits from property. It also defines who has the first right to enclose the asset as collateral if the owner does make payments on the mortgage. There are four layers in a capital stack which are stacked from the bottom up with their rewards and risks. The four layers are senior debt, mezzanine debt, preferred equity, and common equity and common and common Equity.
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