Bringing on outside investors for the first time

[Alex Flaugher]

I am wanting to bring on investors for the first time in a multifamily property. Here is what I am thinking:

$1,000,000 cost and putting $200,000 down. If I bring on 5 investors to fund the deal, how should I structure the deal for them? 

I have read many different stories of offering a preferred return, waterfall return, etc. What has worked best for you in terms of structuring these types of deals with outside money? I want to make sure I structure this in a way that all parties can benefit from the deal. This is new to me and open to any recommendations on routes to take.

Thanks,

Alex 

[Jonathan Twombly]

Originally posted by @Alex Flaugher:

I am wanting to bring on investors for the first time in a multifamily property. Here is what I am thinking:

$1,000,000 cost and putting $200,000 down. If I bring on 5 investors to fund the deal, how should I structure the deal for them? 

I have read many different stories of offering a preferred return, waterfall return, etc. What has worked best for you in terms of structuring these types of deals with outside money? I want to make sure I structure this in a way that all parties can benefit from the deal. This is new to me and open to any recommendations on routes to take.

Thanks,

Alex 

Before doing anything else, you need to speak to a good syndication lawyer, because what you're contemplating is a syndication. Any time that someone else is going to make money off your efforts, which is what it looks like you are thinking about (i.e., they are giving you money and you are doing the deal), you are issuing a security, and you really need to have a professional attorney involved.