forming a RE investment group - Posted by Dave Visco

Real Estate Investing Real Estate Law
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Posted by Dave Visco on August 08, 2007 at 10:10:55:

Thank you for the fantastic response. Very valuable information. I appreciate you taking the time.

Dave

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forming a RE investment group - Posted by Dave Visco

Posted by Dave Visco on August 07, 2007 at 11:26:13:

I have 6 people that would like to invest together. What steps do we need to take? For example, what kind of entity would we form? Do we need to see a RE CPA or a RE Lawyer etc? Thank you

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Re: forming a RE investment group - Posted by JOHN HASLACH, CPA, MST

Posted by JOHN HASLACH, CPA, MST on August 09, 2007 at 13:19:26:

If you are serious about it (this is how many large real estate investors operate), you need to sit down with an attorney and a CPA who are very familiar with real estate operating agreements and the partnership tax laws. If you short cut this, you could end up with a lot of troubles!

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Re: forming a RE investment group - Posted by Bill H

Posted by Bill H on August 07, 2007 at 18:42:56:

Very good reply, Dealmaker.

All of us here have no idea what the investment goals are, what the investment criterial will be, who will control what, who is on first, nor do any of us know how high up is.

Good luck,

Bill H

PS…Watch the “Giggle Emporium Industry”, I have heard lots of them are looney.

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Re: forming a RE investment group - Posted by dealmaker

Posted by dealmaker on August 07, 2007 at 13:41:54:

Unless 5 of them are silent partners I’d recommend starting with a psychiatrist.

Good luck.

dealmaker

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Re: forming a RE investment group - Posted by Dave Visco

Posted by Dave Visco on August 08, 2007 at 04:20:59:

I find your replies absurd. I’m new to this forum and to am trying to form a group. I was looking to the forum for insight on where to start. Hopefully, someone out there has some value to add to the topic. Thank you

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Re: forming a RE investment group - Posted by Rick, the Probate Guy

Posted by Rick, the Probate Guy on August 08, 2007 at 08:55:41:

OK. You’re new and you want some guidance. You got silly answers because your query is so vague, although it appears simple enough on the surface.

There is no such thing as a one-size-fits-all answer here. That’s because you just don’t know what you don’t know. Now before you try putting me in your crosshairs, get answers these question and concensus amoung your fellow would-be investors:

  1. What types of transactions do you, as a group, wish to pursue?

  2. What types of real estate do you wish to invest in?

  3. Buy and hold? Or flip? Or rehab and sell?

  4. What would your typical deal look like?

  5. What time period will this group operate in?

  6. How much does each partner have to invest? Now? In the future?

  7. What if cash flow requires more money? Can you go back to the well?

  8. What if one or more partners want out (or God forbid, die)? What’s the agreement to deal with these issues?

  9. What’s the exit plan? How do you plan to wind up deals?

  10. How is the profit split? By % of capital invested? Does someone get paid for managing the partnership? SOmeone get paid for finding deals?

There are dozens, probably hundreds of similar related questions to ask among your group. To say that you should do this, that or anything specific would be insane.

Absent knowing these answers, I would attend some seminars of real estate trainers that cover these topics, such as Jack Miller, etc. Avoid the dream merchants that have an agenda (sell you stuff above and beyond more training).

As to what’s the best entity, that will depend on
the groups collecive goals, personal tax positions, etc.

Before you’re so quick to criticize the responses you, take a step back and ask yourself how you’d feel if someone came to you with a loosey-goosey question and wanted specific answers to non-specific information.

If you can be objective about this, you’ll see that the reponses you got were not that far off. You just had your feelings hurt because no one seemed to take your (serious) question, seriously.

You could retain a CPA and a good real estate attorney, but at this point you’d be wasting you money until you could give them some specifics such that they are able to give you direction.

Tough love? You betcha!