Obtaining Private Money

Financing, Hard Money Lenders, Private Money
1

Where to start is my biggest question. I have a deal that will make 6% on a lease with a solid (but not class A) client. Not stellar money, but good for this market.

I want to forgo any borrowed money, mainly since its just so hard to get to it right now. But I have NO idea how to tap into private money beyond my circle of family and friends.

I am looking to raise about $500k and that will completely finance and fully upfit the 2800 SQ ft. It is looking to lease at $16 / sq ft. BUT after commissions and property mgmt, etc. I think 6% is not too bad an estimate.

Some other questions:

  1. what do we do with any funds received before the purchase. Use a lawyers trust account (preferred, but not 100% sure)

  2. Who should I hire for reporting to the equity investors: an accountant / lawyer / both? I do not plan on doing the reporting myself - just to keep things at arms length.

  3. What is the best legal structure? I am thinking LLC taxed as a corp or an S- corp. The lessor is a medical office, so that is why I am considering a C-corp. Not sure how much pass through liability there might be.

  4. How do I address the fact that these shares are illiquid and there is no secondary market for them? Most people should know this, but…

Anyway thanks for any and all info on these points.

2

FWIW, after talking with my lawyer & accountant I did get some satisfying answers on the structure, and both of them have suggested some equity partners.

For the structure we are looking at an LLC taxed as a partnership. But to reduce the liability, our partnership shares will be corporations.

We are also going to use a 3rd party for any reporting. Just better to get someone who is at arms length from the whole investment.