Re: Opp of a lifetime… advice needed! - Posted by Casper
Posted by Casper on August 04, 2003 at 01:21:21:
Why dont you form a Limited Liability Company with them. The Company will engage in real estate investmet. You can remain the managing member of the llC, while they remain ordinary members. You may retain 20% ownwer ship, while the retain 40% each. All profits and loses will come to the LLC each year, and you and them will share the profits and losses in accordance to the proportion of your ownership. In addition to your 20%, you could charge a salary for the day to day management of the LLC.
What you are really trying to do is to set up a hedge fund which deals in real estate. You will get a salary as a manager of the fund, and also a percentage of the profit or loss (20% but maybe not likely).
Look for business palns of other real estate companies. You may also want to look at the propectus of a Real Estate Investment Trust (REIT) that will also give you some ideas.
As soon as you have agreed on structure, percentages etc, then get in touch with a Phoenix RE Broker. Tell him/ her your buying parameters. 100 Unit building, of a certain age, within a certain price range, with certain Cap Rate and NOI. Also start scouting for Property management firms in Phoenix ( I suppose you have no experience in this so hire an expert). They will probably know buildings in Phoenix that meet your buying criteria. Thus you could even make an offer for a building that is not really on sale.
As for deciding whether a particular building is a good buy, you can always seek the help of an acqusition consultant (like Ray Alcorn). You will need to consider location, condition of building, age , Cap Rate etc.
You will need an atty in Phoenix that is familiar with large commercial transactions. The property management firms will introduce you to the attorneys they work with.
Then you need to be intellectually equiped for the venture at hand. Quick, go to www.amazon.com. Order books on LLC’s, Joint ventures, Real estate partnerships, How to buy and sell apartment buildings, How to invest in rental properties etc.
But I think the most important thing you need now is to read the business plan/ or operating agreement/ or prospectus/ of a large real estate investment company/ partnership. Such a document will contain ALL the issues that you need to address. Afterall you are about to embark on a similar venture.
I am in New York. I am available should you and these investors decide to do some business in NY, NJ, CT or perhaps to just give another guy a chance.
Good luck and I hope everything works out for you.