I am looking for people who have experience in the areas of LLPs and syndications of deals. I have pretty bad credit now and little cash but I have found several very good deals in the multi-family arena. Because of this it is my plan of action to find private investors to lend money on the deals that I find and put together in either a debt capacity or a JV capacity. I had a few questions I was hoping some of you more experienced investors could help me with:
As my credit is not very good, I was planning on putting together Limited Partnerships for the deals that I do as a Joint Venture. My LLC would be the general patner and the other partner(s) would be involved however spelled out in the LLP paperwork. When a lender looks to lend to a LLP whos credit do they look at?
I have heard of people collecting fees for setting up the JV deals (1 - 5% of the purchase price), what are these and how would they work in a PPM?
Does anybody have any samples of LLP and/or PPM that they have done in the past that have worked?
If I’m able to find Private investors that are willing to finance the whole deal, I could just put them in escrow as the lender to my LLC right?
Any general comments/concerns with deals and structuring them in this way?
Any other ideas on my credit and cash not limiting me in being able to take advantage of good deals?
Any advice on finding private investors? How to approach them? Any presentations that have worked for you? Do any of you mind sharing your private lending sources with me?
Thank you all for your time and consideration!
P.S. Yes, I am working on both the low capital situation and the bad credit!
I wish you the best of luck on all of your future endeavors. In my opinion, the quickest, easiets and less expensive way to get your company going is to began as a birddgo/wholesaler. With this you would be able to earn money by basically doing the least amount of work. In the same hand you would be able to pay off any negative credit or work with a reputable credit repair agency to assist you with gettign your credit to where it needs to be.
By doing so, you will also be able to gain capitol for you to fund your own deals. You won’t really need a silent partner to do your deals. In my opinion, it would take the same amount of time to find a private investor to help you get your joint venture going.
Another option is talking to family and friends. They may know someone that would be willing to to lend their credit or cash to your venture. I hope this makes sense and helps a little.
I agree with the previous post. Do some form of investing that is easier and doesnt cost so much. Syndicating is not exactly a no money down form of real estate investing. There are so many out of pocket costs just to put the thing together. The PPM is going to cost at least $7,500 to start. It is not a do it yourself, fill in the blank, sort of document. Depending on the deal, you may need $20,000 - $50,000 to start. You of course get this back when you sell the deal to your investors.
Now if you are already have investors in your stable you may be able to pitch a JV type agreement to someone that has faith in you and let them put up the cash, but it is a lot harder to do with strangers. On a side note it is never to soon to network and build relationships with potential investors.
There are a couple of good syndication, private money seminars out there, but expect to pay $2,000 - $5,000 to go. They are worth 100 times that though.
Yes, you need to register with the SEC or have an exemption from registration, especially if you are offering an investment to the public. That is why you need funds to begin with. You will need a securities attorney to handle all the SEC requirements.
You shouldnt be afraid of the SEC, though. Just follow the rules. Most syndicators use a Reg D, but you could do a Scor or a Reg A also. We are currently working on a Reg A.
On the other hand you can pitch joint ventures to people you know, all day long and bypass the SEC rules, but a JV and a syndication are two different things. Either way, you want to get to know the people before you do any investing with them. You also want to build your network long before you have a deal going.