I just joined BiggerPockets and must say I am impressed with the community. I currently own a portfolio of multi-family properties valued in the range of $5-7 million (closer to $10 million by the end of the year once I complete a refinance and close on another deal). I have found that I am at a point where I can no longer grow as quickly as I would like to, and am looking for some ideas from people who have been where I want to be. As of right now, I am paying 10% (no equity) to investors and it is quite informal. One of the major issues I am having is trying to figure out the best way to structure a company to accept money from many investors, how to attract many different investors from all over the continent (North America), and how the interest structure would be worked out for future investors. Any advice would be helpful.
Welcome aboard, Raj. Have you looked into crowd funding platforms?
It can be dangerous to have an informal agreement paying 10%. If everything goes right the investors might leave you alone. If the investors start to not get the return they want or they want out if specific exits are not in place it can turn into a mess real quick.
I have been looking at setting up a blind pool myself for people to invest with me in. I like the blind pool because you can act quickly on buying properties. If all the investors have consent and say it makes things take much longer and many sellers will not wait for such a process and you lose out on a deal.
Congratulations ! you can explore using realty mogul platform.
Thanks for all of the replies. I have looked into crowd funding, and I will continue doing some research into it.
@Account Closed suggested or you can place funds for each individual deal into their own LLC and compartmentalize each property. You can have a single managing partner LLC owned by you that manages each of these property LLCs. It keeps the books clean and it's easy to manage the investor returns plus can carry a portion of the equity ownership for yourself. Good luck!
You must be a BiggerPockets member to post on the forums
Join the world's largest, most open Real Estate Investing Community online, 100% free forever!