I recently began the process of moving my career to full time REI. A good friend and colleague, who is also interested in long term real estate investing, said he has multiple investors who would be interested in getting involved in a large multi family deal through me in the market I will be working in. I have a basic knowledge of single family homes and singal rental units and am not versed in REiT's or their makeups. Can someone tell me if this is the best avenue to begin investing their money with me or is their another option? Where can I find standard REIT contract verbiage and how the deals are structured? Do I normally invest the same amount or is there a reasonable fee I can include towards property ownership since I would be creating, closing, and managing the property?
Any tips will be greatly appreciated.
I think you are aiming in the right direction. Eventually, any full-time investor is likely to get into the business of syndicating deals and raising private money. A REIT may overstate what scale you're going for just a bit. Here are some questions of things I would want you to have some experience in before investing in your deals:
1) Partnership deals: Have you ever bought and managed property with a partner or partners?
2) Commercial financing: Have you ever taken out a commercial loan?
3) Do you have investors: In other words: can I speak with them? The obvious 'Chicken or Egg' scenario here leads many to do their first deals with friends and family rounds of funding. The only other way to gain trust is to have a longterm relationship with someone.
For the record, I am making all these comments from the perspective of an investor who currently owns a stake in a fund. I am not making these comments having raised this money, but since I am the type of person you want money from, I imagine the advice can be used accordingly.
From what I researched after my post I think you are correct in saying that a trust is beyond what I am currently requiring for this deal. thank you for the info and I will continue trying to research the best way to structure the deal. BTW I do have experience in partnerships but only with myself and one other person and have limited experience with commercial lending but have used it in the past for a QSR I owned but not for RE.
Talk about the experience you have. Understand that investors will be forgiving about those gaps if they have another relationship with you: trust that is independent from your credentials in this area.
Good luck, and do not hesitate to reach out when you are getting things moving.
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