Investor · Member since 2019 · 25 posts · 24 votes
I'm normally on the other side of these deals and exploring a new set of deals where I'll buy and take on other investors who want to get into the deal. In the ones where I'm the investor/partner we use a pretty standard structure, cap mgmt llc, partnership llc, pass through on K-1 etc...
I'm looking other models that have lower overhead for smaller deals and allow for others to invest/buy equity. Is anyone doing anything else that achieves these things like just having partnership/revenue agreement/contract? I've read a bit about other contract based models and see what some companies are doing by paying people for equity in their homes but nothing detailed enough. If you have experience with other models, I'd love to hear from you.
Investor · Roseville, CA · Member since 2016 · 893 posts · 1k+ votes
5y
I'm not an attorney, so just my 2 cents here.
Are you simply trying to avoid the fees and regulations that go with an LLC? You could explore a LP (limited partnership) where you don't have to have all the LLC fees/setup but you also don't have the personal liability protection that comes with the LLC. Or you could look at a LLLP (limited liability limited partnership) if you are in a state that allows that. Kind of depends on the state you are going to work within and figure out what they allow first, then choose from those options. In general though, however, LLC's are used so much simply because they do a good job within most real estate deals.
Investor · Member since 2019 · 25 posts · 24 votes
5y
Looking at what other models might exist that present new benefits. For instance, selling shares (securities equities) and not entering into partnerships has some advantages, some different types of issues. Reduced fees and increased simplicity are always nice so both are at the top of mind, along with simpler operational overhead. Protection via a LLC, good call out, is also less of a concern since everything is already layered for me. I'm less concerned with specifics by state at the moment also and more interested in hearing what others are doing that might directly or indirectly apply.