Capital stack is nothing more than all the money you need to raise in order to buy that property, and it's going to come in a couple of different forms. It's going to come in debt, or your mortgage.
"Well, I got an 80% loan-to-value."
Great, 80% of your capital stack has just been taken care of.
Now we got 20%. Well, where is that going to come from?
"Well, my pocket, I could put down 5%."
Okay, fine, now we need 15%. Where is that going to come from?
"Well, I got investors. "They're going to come up with 10%."
Good, now we're at 95%. Where's the other 5% going to come from?
"Well, the seller's going to give me a seller financing."
Boom, we just got our 100% capital stack.
That's what a capital stack is. That's all it is.
It's where all of the money is coming from. When you listen to these guys on Wall Street talking about, "Oh, it's a capital stack." Listen, we got debt and we got equity. And that's how we come up with it.
So understand that that's all capital stack is. When you listen to these guys talk, it's just how are you getting to 100% of the raise. How are you getting to that number on the Sources and Uses page from your lender or the Sources and Uses page on your Private Placement Memorandum? How are you getting there?
And that's your capital stack.