Re: Reality check… - Posted by Steve D
Posted by Steve D on December 23, 2002 at 08:12:36:
Deals like that happen all the time in virtually every industry, not just real estate… within real estate you can also set up a property management company, and you’d basically put the deals together and manage the properties, and use “silent investors” as your funding source.
If it’s small enough, you just do a “friends and family” type deal, partnering with people you already know.
If/when you want to go a bit bigger, advertise for investors etc., you’ll need to pull together a PPM (Private Placement Memorandum), and because you are selling securities, you need a good attorney because you don’t want to get in trouble with the SEC - if you are going after enough investors, or have investors in a certain number of states (over 30 I think), then you have to register your offering with the SEC for sure (I’m not an attorney, but I do have limited experience of rasing capital for private ventures in multiple industries).
Take it even further, and you get a publically listed REIT set up, then you have to deal with the SEC on a very regular basis.
So in answer to your question, yes it can being done, and it can and is being done from small deals based around one property, to REITs running from millions to perhaps even billions of dollars holdng multiple properties.
However this is a fundamental change in business strategy - You are now putting security based deals together around real-estate, your primary business becomes selling paper investments based around real estate, as opposed to your primary product being Real Estate.