Posted by John Merchant on May 14, 2007 at 09:00:36:
I’ve assisted a number of REIs in their finding funds for their deals.
Several I recall have used this kind of formula:
Money partner (MP) puts up all money and at sales time gets back his $$$ plus 12% per year on his money plus half of remaining profits.
Title is taken by a new LLC which the MP and the REI both own, and they have specific written Operating Agreement and Articles of the LLC spelling out who is the manager and real decision maker, who does the foot/grunt work, what’s to be done, etc.
A lawyer should be involved in forming the new LLC and working with its owners to get their operating agreement just the way all unit owners want it so as to avoid future arguments and fights.
In my experience the big law firms frequently have a Corporate Section whose lawyers do this kind of thing daily and for competitive fees.