Opp of a lifetime... advice needed! (RAY?) :) - Posted by Scott D

Real Estate Investing Real Estate Law
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Posted by Jay (NY) on August 03, 2003 at 12:09:05:

  1. I think you should ask for more than 10% ownership. This way you might end up with 10%.

  2. If you plan to manage the properties you should be paid a salary without it being deducted from your 10% share.

  3. Try reading some business plans of other real estate businesses to get some ideas as to how to do your own plan.

If they need someone in NY, NJ CT please let me know. I have some opportunities along with good credit and im looking for cash investors for down payment.

Just my advice. I hope this helps. Good luck :slight_smile:

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Opp of a lifetime… advice needed! (RAY?) :slight_smile: - Posted by Scott D

Posted by Scott D on July 28, 2003 at 18:43:31:

2 years ago my brother had the good fortune to cross paths with a couple very rich guys, during his days as an independent-contractor, in high-tech sales. Since then, my bro worked out a deal with the billionaires (yes, literally billionaires)and a Chinese company he had worked with… now the Chinese are supplying the billionaire with hundreds of 1000’s of computers and such for installation in a major hotel chain. The billionaires love my brothers personality, and trust him immensely.
So, last week in passing, my brother mentioned to the billionaires that I was moving to Arizona to begin a career in RE sales, and residential investing. They asked if I had ever done commercial, and my bro said “no”. They asked if I’d be interested. To my understanding, Phoenix area is the 2nd hottest RE market in the US, and these billionaire guys had been talking about getting into commercial RE for a while now. They are the type of guys who had help along their way, and are more than happy to help someone along their own path, if it’s a win-win scenario. They have asked me to fly where they are on the east coast in 2 months, and give them a presentation, outlining a business plan and such. If we are to “click” as my brother put it, and they like my presentation, they will be willing to finance all commercial RE properties 100% cash up-front.
I love giving presentations and such, as I’ve thrived on doing it throughtout my sales career in Radio, TV, and high-tech. However, none have been this important, nor to this extent of magnificence. I am a little bit nervous, if not overwhelmed to have a once-in-a-lifetime opportunity like this. I need to knock their socks off! But I have only put together a business plan for the bank, for a small ad-agency I ran 4 years ago. I am looking for resources, to guide me through putting this in-depth plan together. So please, any books, websites, information, and such that can be recommended, I would be immensely appreciative.
Further, I am debating what perspective I should take in terms of compensation for myself. Do I need to get a commercial RE license? Why, or why not? Or can I or should I be a non-licensed investor on their behalf? The latter is my preference… I have considered pitching 10% ownership in each property purchased. Once their initial investment has been paid back to them in full over a 5-10 year period, we sell the property and I pocket my 10%. With a $3,000 monthly allowance/income for myself, that will be deducted from my 10% share of the profit once sold. (So in actuality, I will be paying myself… not them paying me as an employee) This is all obviously very vague, as I am debating all possibilities. I need to cover every detail, inch-by-inch, and will have approximately 60-90 minutes to make my case.
So PLEASE, anything anyone can offer (ESPECIALLY RAY ALCORN), please do so at your earliest convenience! I know this sounds far-fetched, but it’s true! Thanks so much…

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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.

Cas

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Re: Opp of a lifetime… advice needed! - Posted by Cassie

Posted by Cassie on August 03, 2003 at 12:40:12:

Congrats on the Cash! Don’t be nervous. They can’t pull this off without your help (or some type of help) although they have the cash they are looking at you for the deals. I agree with others, Joint Venture is the way to go. I would do a seperate Joint Venture for each deal (If one goes by the wayside the others won’t be affected if the terms & conditions or met. Read upon Joint Ventrue agreements carefully they can be tricky if you are new. If they have they cash and you’ve got the deals 50/50 sounds more like a better split. If not I would ask for 15% of each deal upfront to walk away paid at each closing. Your cash researve would grow quick if the deals were plentiful, then I would turn around and invest in my own deals without partners. But one thing to remember although it’s good and wise to have your own, 50% of something is better than 50% of nothing.

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Re:Opp of a lifetime… advice needed! (RAY?) :slight_smile: - Posted by Jay (NY)

Posted by Jay (NY) on August 03, 2003 at 12:12:08:

Also,

Try forming a Joint venture with them, you bring the deals, they bring the cash and you’re partners. Actually, i’d ask for more than 10%. If you do it this way you def. won’t need a license.