I'm fairly new to investing: I have a duplex and currently working on a small sub-development in my area. My realtor has told me about an 8 unit apartment building that will be coming up for sale in the early summer and I'm trying to figure out how to make it work. She said the listing realtor told her some of the units already have separate deeds and most of the apartments are fixer uppers. I have resources and access for the rehab part but will need to get the initial downpayment and some rehab money from multiple sources i.e. people I know already.
- Wondering how I set up the money: do I give different percentages for different amounts? Who gets paid back first? How long of a payback schedule do I do? Is it tiered? Do I do it in an LLC?
- Thinking I can rehab one or two of the apartments, sell those to pay the investors back then put the remaining money back into the complex. Looking for people to poke holes in this plan or heads up for any pitfalls that I wouldn't know about being a noob.
- Any good books on commercial structuring money for smaller commercial ventures?
I would try and get one loan for the entire project. If they have different tax ID numbers, etc you can encumber those with a blanket mortgage and get properties released as you pay them off.
@Kate Schwerin is this an apartment building or a condominium building. When you say 'some of the units have separate deeds' that makes me think condominium. Are you looking to by it, fix it up and sell the individual units or keep it all together as a rental apartment building.
Assuming it's just an apartment building you are looking to buy and operate for a profit, there are many ways to structure it. The simplest way is to form an LLC and give each member shares depending on how much money they contribute.
Some members may be doing more of the work or contributing in other ways (such as finding the deal ) and in that case they could be compensated with additional shares.
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