I have about 7 investors willing to pool some cash. We want to invest in property, maybe fund some small mortgages for other investors’ down payments and closing costs.
Does anyone have a step by step plan to start a group, identify the services and rules, ownership, decision making, etc. Do we sell shares? equity? Seems like there would be so many ways to screw up if all members aren’t aware of how everything should work.
Thanks
A few suggestions,
I would structure share or percentage ownership based on amount of capital invested. I would also base voting power based on said shares. Then I would hire one of you as the manager and make that person the decision maker. You don’t want every decision to be made by all seven people, but if the manager isn’t doing well and the group isn’t happy, they can vote for someone else to make the decisions. Paying the manager could be in the form of equity, cash as an expense to the group, or any number of things.
Also a detailed business plan that sets out what the objectives are and what is going to be allowed to use as a vehicles to get there will help a lot to give the decision maker guidance and keep everyone on the same page. Be aware that no matter what you do, it is likely that at some point someone will not understand or chose to not want to understand what has been agreed. These headaches are the price of working with groups. The more that is spelled out and written down and signed the better.
My 2 cents,
DB
You’re definitely going to need a good attorney to structure this to protect yourself and everyone involved. That’s a lot of egos involved in one business. What did you have planned in regards to projects with that much cash?
My attorney is working on a deal with 4 people in a real estate deal that all want out. Its been going on for a couple of months now. Seven lawyers on one case cant be a good thing. I suggest you think hard about this one before you jump into anything.