Making Offers with OPM - Private Equity Partnerships

[James Allen]

Hi BP Community,

I am looking to partner with people on Long term Buy & Holds (1-4 units at the moment) and I'm finding myself in a bit of a dilemma as I'm trying systematize this process. I realize that for me to have the best opportunity to get great deals I need to offer all cash. I want to do so using OPM (other peoples money) to keep scaling my RE Portfolio but take a slice of the equity/cash flow. Essentially, I find the deals/manage the PM and maintenance, etc, and they bring the money as a passive partner. The problem is that RE Agents require a POF in order to make an initial offer on a property and want it to be in an account of mine.

My plan was to organize an LLC in which people disperse their funds into a giant pool of funds as I fundraise and can make offers with this LLC. When I come across a deal, I'll have it in the contract to say and/or assign in which I will transfer the contract to a new LLC which has me and whoever is partnering with me along with an operations agreement detailing Equity break down structure, etc.

The problem I'm having is that I doubt people will want their money sitting in an account even if it's secured via paperwork written up by my attorney if it's not making them any money. 

So my question is, what process would you/have you used to make offers with OPM, considering it is for a long term buy and hold asset? 

Thanks!

[Caleb Heimsoth]

I was reading a thread about this the other day. The minute you have “passive” investors meaning they have zero say in day to day management, that is syndication and you need a securities lawyer.

No legal advice given