What a $60k mezzanine check on a small deal actually looks like start to finish

Worth writing down how a small mezz check performs, since most of what's written about mezzanine debt is aimed at people moving ten times the money. Say a sponsor needs $1.4M behind a $4.6M senior on a 44 unit building. He syndicates the mezz piece in $50k units, 12% current pay, monthly, 30 month term. An investor takes $60k, capital they can set aside for three years. What it looks like in practice: interest hits the account on the 15th of every month, $600, for 29 months. Then a refinance pays off the senior and the mezz together, returning the $60k plus a 1% exit fee that's easy to forget is in the docs. Total collected runs about $18,000 on $60,000 over two and a half years. The part that tends to shake confidence is a missed payment early on, often month two. The usual reason: the lockbox with the senior lender holds funds until the reserve is fully funded, and the mezz payment can't release until that clears. It can take six weeks, with two payments arriving together after. That gap is the moment to read the intercreditor agreement properly, ideally before wiring rather than after, since the mezz payment often sits behind a reserve funding condition that isn't obvious at a glance. What holds up: only doing this with a sponsor whose prior deals were watched all the way through. What to change: read the cash management section before the wire, not after.