BiggerPockets

If you were pitching to a group of potential partners to collectively purchase an apartment. What would you include in the pitch?

Hi Roselynn,

First you need to clarify what you mean by potential partners. Let's assume you are talking about partners that will have equal control over the project. If that is the case then the pitch would be what you can bring to the table and what you are looking for in a partner. RE transactions need four main pieces. Someone with knowledge and experience, someone with time, someone with money, and usually someone with credit. If you are missing any of these, that is what you should be looking for.

If you are looking for equity partners that will have little or no say so as to the conduct of the project, and are just bringing in money, then you need to take a step back. If their money is protected by a first or second deed then you should be OK with the General solicitation. If you are planning on pooling funds then you are treading in SEC waters and need to know the restrictions as to what you can and cannot say in a group that you do not have a significant relationship with. Do a google search on Reg D exemptions if pooling funds is your plan.

Jeff

The use of a deed of trust and note doesn't avoid securities issues, not with multiple investors, Reg D mentions the exemption of real estate loans, but further research you'll find that where ever three or more gather together, a note can become a bond and securitization issue.

While you mentioned various strategies, that breezes over a more complicated issue than you're possibly aware of, basing that on the fact you asked the question. Breaking up a security interest in a deed of trust is a securitization function by participation. While it helps to have qualified investors and if not having had past relationships, the slicing up of a security interest is still a problem.

You can have three in an LLC and you could have 3 LLCs, just avoids issues, but you can have 100 members, but it just gets sticky.

I'd suggest you pass it by a securities or financial attorney.

As to your presentation, I'd suggest you line up folks individually and get past the nuts and bolts and not in a group. I use to give seminars looooong ago, when the questions start flying you'll need a very good command of the topic, need to anticipate what your answer will lead to for another question. Providing the return of money as well on money can get complicated quickly, I'd say it's not a group topic.

You can certainly show the dazzel with a group, an overall business plan, talk about tax advantages of owenership and the generalities of owning multi-family, but when it gets to an individual and thier money that should be addressed privately. You'll also find that people don't talk about money issue in public as the conversation can quickly get personal.

My nickle's worth, IMO.

Bill G. @Bryan Hancock So then IF you were @Roselynn Lewis and had a project that you needed help funding, and were lacking the required skin in the game, experience ,or credit, what would YOU do to put the deal together? Obviously she has the project, but lacks at least the money so Step 1 and so on?

@Bill G were you an attorney in a previous life?