Newbie - I have a private investor, What next???

5 Replies

So I am new to this whole game when talking about real estate investing. I am a licensed electrician working in a senior PM position for a MA ESCO. I have extensive construction experience i.e commercial, residential etc. 

The owner of my company has on more than one occasion mentioned to me he is very interested in building a real estate portfolio. Funny that, so am I! One problem is I am not financially in a position to start my real estate portfolio, he is. He is willing to put up $100k and he is open to all options. He wants me to put a few real estate investment options together. I see this as a great opportunity to build experience before I sink my own money into the game.

But my question is how do I sell this plan to him? And how do I build in a little earner for myself on top of the invaluable experience. A % of the profit maybe? I will be doing most of the work using my contractor contacts. We are sourcing a real estate agent right now as well as this I know will be a vital piece of the jigsaw. Any advice will be greatly appreciated.

There are obviously many options for setting up a partnership. One would be to have your boss put up the cash to purchase, and you handle all the rehab and carrying costs. When it sells, subtract out each of your costs and split the profit 50/50. You're doing the hard work, but he's making it possible.

You need to sit down with him, soon, and see what he's specifically thinking. Sounds like he's offering to get you started in a fantastic business. Do it now before someone else comes along and agrees to invest the 100k for him.

@Stephen Brown

You are in an enviable position for many starting out on the forums. We have a saying in my business (Software Consulting): The amount of money you make sets the bar you must exceed. If you take a lower percentage, you'll have much more room for error. I would not take a 50/50 deal in your bosses position. Even the experienced fundraisers I know do 60/40 with the investors on the high side. I say go a little lower, but give yourself to learn and fail at a few things. 

Good luck.

@Stephen Brown

I agree with @Trevor Ewen

 you should do a 60/40 with your boss on top because it'll also attract more investors & in the long run give you more experience in the investing game.

Welcome to BP, wish you the best of success!

@Stephen Brown Something I would cover early on is the structure of your partnership. Will you buy as tenants-in-common with % listed? Buy in one of your name's and have a side JV agreement? Form an LLC and have different % membership? I would probably start as TIC with % listed and have a JV agreement outlining how sales proceeds and/or losses are addressed. Setting this up right in the beginning is crucial, especially since you 'partner' is also the owner of your company!

Thank you all for your excellent feedback. I will take all of your advice on board. Some of the business agreements mentioned I am not familiar with. There is so much to learn. It can seem overwhelming but I intend to learn as much as I can using BP before I go back to my boss with a plan. I really feel the experience I will gain will be my biggest pay off. Tks again.

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