Collective investors

13 Replies

Hi BP community!

I'm talking to a guy here in Albuquerque who claims to be a licensed real estate agent and a project manager for investors. He offered me to join his collective group of investors with the amount of money I feel comfortable and said he tries to only find flip projects with 30% ROI.

I have met him 3 or 4 for coffee and he doesn't seem pushy at all.

He has his website and showed me his selling/flipping history.

He recommended me to contact banks and lenders to check my credit and they seem to know his name at these institutions.

He took me to one of the projects he is managing and introduced me to one of his investors and contractors.

My question to you guys is; what else should I do to protect myself and my money if I decide to go in, with cash, and join his collective investors. 

I told him I would like to start small and with cash and he said a money wire or check will be all I needed to do and after that investors are updated weekly on the invested project and can visit the flip as many times as we want to check on the progress.

Please advice before I get ripped off ????

Thanks BP

Emmanuel 

@Emmanuel 

I also run my own pooling fund, If you would like to talk off line be glade to help. 

One thing I see you did not mention is a contract?

Which Realtor is it?

@Sydney

Thanks... 

He hasn't mentioned a contract. I asked him about that and he said I will get a receipt stating that I joined the collective.

Originally posted by @Joel Belding :

Which Realtor is it?

 Thanks Joel...

His name is Jeff Poston. Do you know him?

Emmanuel,

You should be able to check his real estate license with the state to make sure he is who he says he is.  I've been jerked around by as may licensed folks as non license folks over the past 15 years but if he is licensed by the state then you have a mechanism for seeking redress outside of court should things go south.  

I hope he is using some type of legal entity to purchase these properties such as an LLC rather than a general partnership. This is not a necessity for some but it is something i would require before joining the group. Assuming so, you should be able to confirm with the state that this entity is in good graces with the state but that will not tell you if it is a good deal just that he is current with the paperwork.

You should be able to check county records (maybe even online) to make sure the properties he claims to own are actually owned by the entity(ies) he claims owns them in.  

Make sure you read and understand the operating agreement and how he is compensated from the get go.  If you don't understand something, especially if it sounds fishy or shady to you, seek council or walk away.  If he is bringing the knowledge, the experience, the labor, and the property then he needs to be compensated but make sure it is reasonable to you and clearly defined in the agreement.  Good fences make good neighbors.  

I've been involved in several partnerships of this sort since 2002 and thus far all have worked out well. Most of them I have been the managing member of but others I have been a passive investor only.  In all three instances where I was not the managing member, I had a great deal of trust in the managing members in advance of the deal.  It's always good to network with others who have achieved the success you are looking for well in advance of a deal.

My advice is to start small, learn as much as you possibly can about the process, and if I were you I wouldn't cosign the note but that's just how I like to operate when i'm a minority owner in any partnership that I don't control.  

Please note that I am not an attorney or CPA.  I'm just a gold old boy from Guymon Oklahoma and do not provide tax or legal advice.  

Final thought, unless you need to flip to make money to fund the next deal why sell at all?  I have found a market that I believe in and don't plan to sell anything else if i can keep from it.  I did sell one place a couple years back where I made really good money but I often regret having turned loose of that property when I could have found other ways to continue growing without that big hit of capital.  

I wish you great success in all your endeavors and look forward to learning what you choose to do?

@Account Closed

 I do know Jeff!  He is awesome!  Jeff sold me my first property and is the guy that got me into the real estate business.  He is a top notch Realtor and is one of the most knowledgeable investors in Albuquerque.  I highly recommend working with him; you will not be disappointed.  Even though Jeff and I work at different brokerages, he is still my go-to guy for advice about really complicated investment strategies.  He really knows his stuff and is great about staying in touch with his clients.  If I were currently investing in syndicated rehabs, I would have no hesitations trusting Jeff with my money.   If you are still hesitant, try investing a small amount first and work up to larger deals with him.  I hope this helps!

Originally posted by @Chad Abbey :

Emmanuel,

You should be able to check his real estate license with the state to make sure he is who he says he is.  I've been jerked around by as may licensed folks as non license folks over the past 15 years but if he is licensed by the state then you have a mechanism for seeking redress outside of court should things go south.  

I hope he is using some type of legal entity to purchase these properties such as an LLC rather than a general partnership. This is not a necessity for some but it is something i would require before joining the group. Assuming so, you should be able to confirm with the state that this entity is in good graces with the state but that will not tell you if it is a good deal just that he is current with the paperwork.

You should be able to check county records (maybe even online) to make sure the properties he claims to own are actually owned by the entity(ies) he claims owns them in.  

Make sure you read and understand the operating agreement and how he is compensated from the get go.  If you don't understand something, especially if it sounds fishy or shady to you, seek council or walk away.  If he is bringing the knowledge, the experience, the labor, and the property then he needs to be compensated but make sure it is reasonable to you and clearly defined in the agreement.  Good fences make good neighbors.  

I've been involved in several partnerships of this sort since 2002 and thus far all have worked out well. Most of them I have been the managing member of but others I have been a passive investor only.  In all three instances where I was not the managing member, I had a great deal of trust in the managing members in advance of the deal.  It's always good to network with others who have achieved the success you are looking for well in advance of a deal.

My advice is to start small, learn as much as you possibly can about the process, and if I were you I wouldn't cosign the note but that's just how I like to operate when i'm a minority owner in any partnership that I don't control.  

Please note that I am not an attorney or CPA.  I'm just a gold old boy from Guymon Oklahoma and do not provide tax or legal advice.  

Final thought, unless you need to flip to make money to fund the next deal why sell at all?  I have found a market that I believe in and don't plan to sell anything else if i can keep from it.  I did sell one place a couple years back where I made really good money but I often regret having turned loose of that property when I could have found other ways to continue growing without that big hit of capital.  

I wish you great success in all your endeavors and look forward to learning what you choose to do?

Chad thanks for your help... He is using a LLC and also encouraged me to get one when applicable. I will do more reseach and I will keep you posted...

Also, if you haven't already done so, go to his website at www.investorsonly.net and sign up for his newsletter.  It outlines the properties that his cooperative is looking to invest in.  It also shows you which ones he passes on and the reasons why.  Plus, he has a great collection of short videos there that help aspiring investors to understand the market and terminology.

Originally posted by @Joel Belding :

@Emmanuel Rosa

 I do know Jeff!  He is awesome!  Jeff sold me my first property and is the guy that got me into the real estate business.  He is a top notch Realtor and is one of the most knowledgeable investors in Albuquerque.  I highly recommend working with him; you will not be disappointed.  Even though Jeff and I work at different brokerages, he is still my go-to guy for advice about really complicated investment strategies.  He really knows his stuff and is great about staying in touch with his clients.  If I were currently investing in syndicated rehabs, I would have no hesitations trusting Jeff with my money.   If you are still hesitant, try investing a small amount first and work up to larger deals with him.  I hope this helps!

 Joel! thanks so much for your help... I do feel like I can trust him because he is so simple and helpful, but I do want to cover all the basics and build good fences so we could be neighbors forever like Chad said on his advice above.

There is no amount of coffee to repay you for your input, but I would love to take you out for coffee or lunch sometime here in ABQ! 

Thanks again!

Emmanuel 

@Account Closed

 even with one glowing recommendation (probably from someone else you don't know) what has been mentioned earlier is key - you need some kind of contract and you need to have your legal counsel review it.  A "receipt" for cash transferred to someone doesn't mean anything.  You want to know exactly what kind of ownership & liability you will have, you want to know that they are set up legally to syndicate funds and won't get in trouble with the SEC, etc.  Some cash spent up front on legal fees and due diligence is far better than cash spent because it disappears into someone else's bank account.

Medium team zen logo vMicki M., 33 Zen Lane | [email protected] | http://www.33zenlane.com | CO Agent # 100037721, NM Agent # 19441

Originally posted by @Micki M. :

@Account Closed

 even with one glowing recommendation (probably from someone else you don't know) what has been mentioned earlier is key - you need some kind of contract and you need to have your legal counsel review it.  A "receipt" for cash transferred to someone doesn't mean anything.  You want to know exactly what kind of ownership & liability you will have, you want to know that they are set up legally to syndicate funds and won't get in trouble with the SEC, etc.  Some cash spent up front on legal fees and due diligence is far better than cash spent because it disappears into someone else's bank account.

 Everything she said, I would like to repeat!!! If they are reluctant to sign a contract, run! You need a contract reviewed by YOUR attorney, not theirs. 

Is he pooling funds in accordance with SEC rules?  Have you seen a prospectus?

If not, he may be breaking the law, and it may limit your recourse should things go south or should he decide to take off with your cash.

And btw, if there's not even a contract, I'd RUN the other way as fast as I could...and wouldn't stop running...

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